- Reports net income of $62.6 million
and adjusted net income of $90.5 million
- The continuing operations reflected
a net income of $32.8 million and adjusted net income of $81.7
million
- The discontinued operations
reflected a net income of $29.8 million and adjusted net income of
$8.8 million
- Adjusted net interest margin of
4.64% in Q3 2014 vs. 4.68% in Q2 2014
- Credit Quality (excluding covered
loans):
- Non-performing loan inflows,
excluding consumer loans, were down by $23.8 million, or 15.7%,
from Q2 2014;
- Non-performing loans
held-in-portfolio (NPLs) decreased by $17.8 million, or 2.8% from
Q2 2014; NPLs to loans ratio decreased to 3.2% from 3.3% in Q2
2014;
- Net charge-offs (NCOs) were 0.83% of
average loans held-in-portfolio vs. 0.94% in Q2 2014; NCOs declined
$5.7 million quarter over quarter;
- Allowance for loan losses of $521.7
million vs. $526.2 million in Q2 2014; Allowance for loan losses to
loans held-in-portfolio at 2.69% vs. 2.68% in Q2 2014.
- Completed the sale of its Central
Florida and Illinois regional operations
- Repaid TARP funds on July 2,
2014
- Common Equity Tier 1 ratio of 14.8%
and Tangible Book Value per Share of $36.24 at September 30, 2014;
capital exceeds well-capitalized minimum threshold by $2.2
billion.
Popular, Inc. (the “Corporation” or “Popular”) (NASDAQ:BPOP)
reported a net income of $62.6 million and adjusted net income of
$90.5 million for the quarter ended September 30, 2014, compared to
net loss of $511.3 million and adjusted net income of $86.2 million
for the quarter ended June 30, 2014.
Mr. Richard L. Carrión, Chairman of the Board and Chief
Executive Officer, said: "In the third quarter Popular reached
important milestones, such as the repayment of TARP and continued
the restructuring of our U.S. operations, completing the sale of
our Illinois and Central Florida operations. These accomplishments
come in concert with another period of stable results and credit
quality, reflecting our ability to operate successfully even under
challenging conditions".
Earnings Highlights
(Unaudited) Quarters ended Nine months ended
(Dollars in thousands, except per share information)
30-Sep-14 30-Jun-14 30-Sep-13 30-Sep-14
30-Sep-13 Net interest income (expense) $ 326,421 $ (59,381 ) $
331,012 $ 618,211 $ 990,067 Provision for loan losses – non-covered
loans 68,166 50,074 48,715 172,362 486,783 Provision for loan
losses – covered loans [1] 12,463
11,604 17,433
49,781 60,489 Net interest income
(expense) after provision for loan losses 245,792 (121,059 )
264,864 396,068 442,795 FDIC loss share expense (4,864 ) (55,261 )
(14,866 ) (84,331 ) (44,887 ) Other non-interest income 129,194
118,050 301,575 367,482 650,624 Operating expenses
310,640 275,439 308,292
863,678 917,381
Income (loss) from continuing operations before income tax 59,482
(333,709 ) 243,281 (184,459 ) 131,151 Income tax expense (benefit)
26,667 (4,124 )
17,768 45,807 (276,489 )
Income (loss) from continuing operations $ 32,815
$ (329,585 ) $ 225,513 $ (230,266 )
$ 407,640 Income (loss) from discontinued operations,
net of tax $ 29,758 $ (181,729 ) $
3,622 $ (132,066 ) $ 28,656 Net income
(loss) $ 62,573 $ (511,314 ) $ 229,135
$ (362,332 ) $ 436,296 Net income
(loss) applicable to common stock $ 61,643 $
(512,245 ) $ 228,204 $ (365,124 ) $
433,504 Net income (loss) per common share from continuing
operations - Basic $ 0.31 $ (3.21 ) $
2.18 $ (2.27 ) $ 3.94 Net income (loss)
per common share from continuing operations - Diluted $ 0.31
$ (3.21 ) $ 2.18 $ (2.27 )
$ 3.93 Net income (loss) per common share from
discontinued operations - Basic $ 0.29 $ (1.77
) $ 0.04 $ (1.28 ) $ 0.28 Net
income (loss) per common share from discontinued operations -
Diluted $ 0.29 $ (1.77 ) $ 0.04
$ (1.28 ) $ 0.28 [1] Covered loans
represent loans acquired in the Westernbank FDIC-assisted
transaction that are covered under FDIC loss sharing agreements.
Significant events
- On July 2, 2014, the Corporation
completed the repayment of TARP funds to the U.S. Treasury through
the repurchase of $935 million of trust capital securities issued
to the U.S. Treasury under the TARP Capital Purchase Program. The
Corporation funded the repurchase through a combination of
available cash and approximately $400 million from the proceeds of
the issuance of its $450 million aggregate principal amount of 7%
Senior Notes due on 2019 issued on July 1, 2014.
On July 23, 2014, the Corporation also
completed the repurchase of the outstanding warrant initially
issued to the U.S. Treasury under the TARP Capital Purchase Program
in 2008. The warrant represented the right to purchase 2,093,284
shares of the Corporation’s common stock at an exercise price of
$67 per share with an original term of 10 years. The Corporation
and the U.S. Treasury agreed upon a repurchase price of $3.0
million for the warrant. With the completion of this transaction,
the Corporation completed its exit from the TARP Capital Purchase
Program.
In connection with the repayment of TARP on
July 2, 2014, the Corporation accelerated the related amortization
of the discount and deferred costs amounting to $414.1 million,
which is reflected as part of interest expense in the consolidated
statement of operations, during the second quarter of 2014.
- During the third quarter of 2014, the
Corporation completed two of the previously announced sales of its
regional operations in the U.S. The sales of its Central Florida
and Illinois operations resulted in a net gain of $1.2 million and
$24.6 million, respectively. The sale of the California region is
expected to be completed before the end of the year.
The Corporation continues its strategy of
centralizing certain back office operations in Puerto Rico and New
York. The Corporation incurred $8.3 million in restructuring
charges during the third quarter of 2014. Over the course of the
fourth quarter of 2014 and early in 2015, an additional $41 million
in restructuring charges are expected to be incurred, comprised of
$22 million in severance and retention payments and $19 million in
operational set-up costs and lease cancelations. Upon the
completion of the regional sales and the centralization of
operations in the first half of 2015, annual operating expenses are
expected to decrease by approximately $40 million, after the
reorganization is complete. This decrease in expenses is expected
to offset the reduction in revenues that will result from the sale
of the regional operations.
In connection with the restructuring of its
U.S. mainland operations, the Corporation is also taking steps to
restructure its balance sheet and funding strategies. As part of
the strategy, during the third quarter of 2014, the Corporation
sold approximately $94.2 million in securities available for sale
and refinanced approximately $638 million in long term structured
repos in the U.S. with a yield of 4.41% and replaced them with
lower cost short-term repos of a similar amount. The fees
associated with the refinancing of these repos were $39.7 million,
of which $20.7 million were recorded as interest expense during the
third quarter of 2014, with remainder to be recorded during the
fourth quarter of 2014.
The Corporation also sold or entered into
agreements to sell certain of its legacy and classified loans in
the U.S. for an aggregate of approximately $220.7 million which
resulted in a net loss of approximately $12.0 million in the
quarter, which is reflected in the provision for loan losses.
- As previously disclosed, on July 31,
2013, BPPR filed a statement of claims with the American
Arbitration Association requesting that the review board determine
certain matters relating to the loss-share claims under its
commercial loss share agreement with the FDIC. The statement of
claim also included requests for reimbursement of certain valuation
adjustments for discounts to appraised values, costs to sell
troubled assets and other items. On October 17, 2014, BPPR and the
FDIC settled the claims that had been submitted to the review
board. The settlement provides for an agreed methodology for
submitting claims for reimbursement of charge-offs for late stage
real-estate-collateral-dependent loans. While the terms of the
settlement could delay the timing of reimbursement of certain
claims from the FDIC, the settlement is not expected to have a
material adverse impact on BPPR’s current estimate of expected
reimbursable losses for the covered portfolio through the end of
the loss share agreement in the quarter ending June 30, 2015.
- On October 20, 2014, the Memorandum of
Understanding (the “MOU”) entered into on July 2, 2011 between
Popular, Inc., BPPR, the Federal Reserve Bank of New York
(the””FRB-NY”) and the Office of the Commissioner of Financial
Institutions of Puerto Rico was lifted. The MOU provided, among
other things, for the Corporation to take steps to improve its
credit risk management practices and asset quality, and for the
Corporation to develop strategic plans to improve earnings and to
develop capital plans. The MOU also required the Corporation to
obtain approval from the applicable MOU counterparties prior to,
among other things, declaring or paying dividends, purchasing or
redeeming any shares of its stock, consummating acquisitions or
mergers, or making any distributions on its trust preferred
securities or subordinated debentures.
The decision to sell three of its U.S. regional operations
resulted in the discontinuance of each of these respective
operations. As required by US GAAP, current and prior periods
presented in the consolidated statement of operations as well as
financial information covering income and expense amounts presented
in this earnings release has been retrospectively adjusted for the
impact of the discontinued operations for comparative purposes. The
consolidated statement of financial condition and related financial
information for prior periods included in this earnings release do
not reflect the reclassification of BPNA’s assets and liabilities
to discontinued operations. Refer to Table P for a detail of the
net loss, assets and liabilities from the discontinued operations.
Also, refer to Table Q for details of the restructuring charges
incurred during the quarter ended September 30, 2014.
The following table reflects the results of operations for the
third quarter of 2014, with adjustments to exclude the impact of
significant events.
Quarter ended (Unaudited) 30-Sep-14 (In
thousands) Actual Results (US GAAP) BPNA
Reorganization [2] Income Tax Adjustments [3]
Indemnification Asset Adjustment [4] Adjusted Results
(Non-GAAP) Net interest income $ 326,421 $ (20,663 )
$ - $ - $ 347,084 Provision for loan losses –
non-covered loans 68,166 11,950 - - 56,216 Provision for loan
losses – covered loans [1] 12,463
- - -
12,463 Net interest income (expense) after provision
for loan losses 245,792 (32,613 ) - - 278,405 FDIC loss share
expense (4,864 ) - - 15,046 (19,910 ) Other non-interest income
129,194 - - - 129,194 Restructuring costs 8,290 8,290 - - - Other
operating expenses 302,350 -
- - 302,350
Income (loss) from continuing operations before income tax
59,482 (40,903 ) - 15,046 85,339 Income tax expense
26,667 - 20,048
3,009 3,610 Income (loss) from
continuing operations $ 32,815 $ (40,903 ) $ (20,048 ) $ 12,037 $
81,729 Income (loss) from discontinued operations, net of tax
$ 29,758 $ 20,949 $ -
$ - $ 8,809 Net income (loss) $ 62,573
$ (19,954 ) $ (20,048 ) $ 12,037
$ 90,538 [1] Covered loans represent loans acquired in the
Westernbank FDIC-assisted transaction that are covered under FDIC
loss sharing agreements. [2] Includes losses on bulk sales
and reclassifications to loans held-for-sale of classified and
legacy loans for an aggregated net loss $12.0 million, loss on the
refinancing of structured repos for $20.7 million recorded as
interest expense, restructuring cost of $8.3 million and the net
gain of $25.8 million on the sale of the Central Florida and
Illinois regional operations, which was offset by costs directly
associated with the unwinding of the regions subject to the sales
for $4.8 million. [3] As disclosed last quarter, on July 1,
2014, the Government of Puerto Rico approved an amendment to the
Internal Revenue Code, which, among other things, changed the
income tax rate for capital gains from 15% to 20%. As a result, the
Corporation recognized an income tax expense of $20.0 million,
mainly related to the deferred tax liability associated with the
portfolio acquired from Westernbank. [4] The FDIC
indemnity asset amortization included a positive adjustment of
$15.0 million to reverse the impact of accelerated amortization
expense recorded in prior periods. Refer to Non-Interest section
for further details. Quarter ended (Unaudited)
30-Jun-14 (In thousands)
Actual Results(US GAAP)
TARP repaymentdiscountamortization
andIncome Taxadjustments [2]
BPNAReorganization [3]
Adjusted Results(Non-GAAP)
Net interest (expense) income $ (59,381 ) $ (414,068 )
$ - $ 354,687 Provision for loan losses – non-covered
loans 50,074 - - 50,074 Provision for loan losses – covered loans
[1] 11,604 -
- 11,604 Net interest (expense)
income after provision for loan losses (121,059 ) (414,068 ) -
293,009 FDIC loss share expense (55,261 ) - - (55,261 ) Other
non-interest income 118,050 - - 118,050 Restructuring costs 4,574 -
4,574 - Other operating expenses 270,865
- - 270,865
(Loss) income from continuing operations before income tax
(333,709 ) (414,068 ) (4,574 ) 84,933 Income tax (benefit) expense
(4,124 ) (14,524 ) -
10,400 (Loss) income from continuing
operations $ (329,585 ) $ (399,544 ) $ (4,574 ) $ 74,533 (Loss)
income from discontinued operations, net of tax $ (181,729 )
$ - $ (193,363 ) $ 11,634 Net
(loss) income $ (511,314 ) $ (399,544 ) $
(197,937 ) $ 86,167 [1] Covered loans represent loans
acquired in the Westernbank FDIC-assisted transaction that are
covered under FDIC loss sharing agreements. [2] Income tax
adjustments include a benefit of approximately $23.4 million
related to a Closing Agreement with the PR Department of Treasury,
completed during the second quarter of 2014 and the negative impact
of the deferred tax asset valuation allowance of approximately $8.9
million recorded at the Holding Company, due to the difference in
the tax treatment of the interest expense related to the TARP funds
and the newly issued $450 million senior notes. Refer to Income
taxes section for further details. [3] Adjustments included
within Loss from discontinued operations include approximately
$186.5 million of goodwill impairment charge and $6.9 million in
transaction costs, which include severance payment expenses, legal
and other professional services, incurred in connection with the
agreements to sell the U.S. regional operations. Refer to Table P
for a detail of the net loss from discontinued operations.
Adjustments within operating expenses are related to restructuring
charges incurred in connection with the reorganization of PCB.
Refer to Table Q for a detail of restructuring charges.
Quarters ended (Unaudited) Adjusted Results
Non-GAAP (In thousands) 30-Sep-14 30-Jun-14
Variance Net interest income $ 347,084 $ 354,687 $ (7,603 )
Provision for loan losses – non-covered loans 56,216 50,074 6,142
Provision for loan losses – covered loans [1] 12,463
11,604 859 Net interest income
after provision for loan losses 278,405 293,009 (14,604 ) FDIC loss
share expense (19,910 ) (55,261 ) 35,351 Other non-interest income
129,194 118,050 11,144 Restructuring costs - - - Other operating
expenses 302,350 270,865
31,485 Income from continuing operations before income tax
85,339 84,933 406 Income tax expense 3,610
10,400 (6,790 ) Income from continuing
operations $ 81,729 $ 74,533 $ 7,196 Income from discontinued
operations, net of tax 8,809 11,634
$ (2,825 ) Net income (loss) $ 90,538 $ 86,167
$ 4,371 [1] Covered loans represent loans acquired in
the Westernbank FDIC-assisted transaction that are covered under
FDIC loss sharing agreements.
Net interest income
For the quarter ended September 30, 2014, the Corporation had a
net interest income of $326.4 million and an adjusted net interest
income of $347.1 million, excluding the impact of the $20.7 million
expense related to the refinancing of structured repos, compared to
a net interest expense of $59.4 million for the previous quarter.
Excluding the impact of the accelerated amortization of the
discount and deferred costs of $414.1 million associated with the
TARP trust preferred securities, net interest income was $354.7
million, for the second quarter of 2014. Net interest margin was
4.36% for the third quarter of 2014, compared to (0.77%) for the
previous quarter. Adjusted net interest margin was 4.64%, compared
to 4.68% for the second quarter of 2014. The main drivers of the
adjusted decrease in the net interest income of $7.6 million, or
four basis points, were:
- A decrease of $14.7 million, or one
hundred and eighty eight basis points, in income from the covered
loans portfolio, mainly related to the $7.6 million impact of a
change in the estimated life of certain commercial loans resulting
in an extension of the period in which the accretion of income will
be recorded. Although the total estimated cash flows for the life
of these loans increased, the nominal interest income was reduced
for each reporting period, thus lowering the yield. Also, a loan
resolution during the second quarter of 2014 resulted in a one-time
benefit of approximately $4.9 million in that quarter. Refer to
Table O for schedule of the accretable yield for covered loans
accounted for under ASC 310-30.
- A decrease of $2.6 million, or six
basis points, in income from commercial loans, due mainly to lower
volume of loans at BPPR principally related to the repayment of
certain government lines of credit, partially offset by the impact
of one more day during the third quarter of 2014, compared to the
previous quarter.
- A decrease of $12.9 million, or one
hundred and forty three basis points, on interest expense on
borrowings, mainly related to the lower yield on the 7% Senior
Notes issued on July 1, 2014, to partially fund the repayment of
TARP funds, as compared to the 16% yield on the TARP funds incurred
during the previous quarter.
BPPR’s net interest margin was 5.25%, a decrease of twenty five
basis points from the previous quarter. Net interest income
amounted to $315.7 million for the quarter ended September 30,
2014, compared with $334.0 million for the previous quarter. The
decrease in the net interest income was mainly due to the above
mentioned decrease in interest income from covered loans and lower
volume of commercial loans.
BPNA earned $26.4 million in net interest income for the quarter
ended September 30, 2014. Excluding the impact of the repos
refinancing, the net interest income was $47.1 million, compared
with $48.7 million in the previous quarter. Net interest margin was
1.82% for the quarter. The adjusted net interest margin for the
quarter was 3.23%, compared to 3.25% in the previous quarter. The
decrease in net interest income was mostly the result of a lower
volume of mortgage loans due to portfolio amortization and lower
yield on commercial loans.
Non-interest income
Non-interest income was $124.3 million for the third quarter of
2014, an increase of $61.5 million when compared with the second
quarter. The FDIC indemnity asset amortization for the third
quarter of 2014 included a benefit of approximately $15.0 million
to reverse the impact of accelerated amortization expense recorded
in prior periods. This amount will be recognized as expense over
the remaining portion of the Loss Sharing Agreement that expires in
the quarter ending June 30, 2015. Excluding this impact,
non-interest income increased by $46.5 million compared to the
second quarter of 2014, driven primarily by the following
items:
- Lower FDIC loss-share expense by $35.4
million, driven by lower amortization of the indemnification asset
by $29.6 million due to the impact of the reduction in expected
losses of $102.9 million during the second quarter of 2014 which
resulted in a significant increase in the amortization during such
quarter; higher mirror accounting on reimbursable expenses by $4.5
million due to higher OREO expenses, including write-downs and
sales of covered OREO properties, and a positive variance in the
fair value adjustment of the true-up payment obligation. See
additional details about covered portfolio and FDIC indemnity asset
in Table O.
- Higher mortgage banking activities
income by $10.6 million due to lower realized losses of $5.7
million on closed derivatives positions and lower unfavorable
valuation adjustments on mortgage servicing rights of $5.2 million
at the BPPR segment. Refer to Table F for details of mortgage
banking activities.
- Higher net gain on sale of loans,
including valuation adjustments on loans held-for-sale by $5.9
million due to commercial NPL’s sales at BPPR and BPNA segments, as
part of workout activities.
These positive variances were partially offset by:
- Higher provision for loans sold with
credit recourse by $2.0 million.
- Lower other service fees by $1.6
million mostly due to lower sale and administration fees at the
broker dealer business due to lower transaction volumes in the
third quarter. Refer to Table F for a breakdown of other service
fees.
- Net losses on investment securities by
$1.8 million due to the sale of securities available for sale at
BPNA segment.
Refer to Table B for further details.
Financial Impact of FDIC-Assisted Transaction
(Unaudited) Quarters ended Nine months
ended (In thousands) 30-Sep-14 30-Jun-14
30-Sep-13 30-Sep-14 30-Sep-13
Income
Statement
Interest income on covered loans $ 68,251 $ 82,975 $ 71,631 $
232,324 $ 213,952 Total FDIC loss share expense (4,864 ) (55,261 )
(14,866 ) (84,331 ) (44,887 ) Other non-interest income - - 109 -
593 Provision for loan losses 12,463
11,604 17,433 49,781
60,489 Total revenues less provision
for loan losses $ 50,924 $ 16,110
$ 39,441 $ 98,212 $ 109,169
Balance
Sheet
Loans covered under loss-sharing agreements with FDIC $ 2,654,263 $
2,736,102 $ 3,076,009 FDIC loss share asset 681,106 751,553
1,324,711 FDIC true-up payment obligation 126,473
127,551 124,092
See additional details on accounting for FDIC-Assisted
transaction in Table O.
Operating expenses
Operating expenses increased by $35.2 million when compared with
the second quarter of 2014. Excluding the impact of the significant
events related to the BPNA reorganization, operating expenses
increased by $31.5 million compared to the second quarter of 2014,
driven primarily by:
- Higher other real estate owned (OREO)
expenses by $16.3 million, mainly due to higher losses on sales of
OREOs at BPPR by $5.6 million largely related to several auctions
of OREO properties as part of the Corporation’s resolution
strategies, higher write-downs on mortgage and commercial
properties, and an increase in property tax payments.
- Higher other operating expenses by $9.9
million, due to higher provision for unused commitments in BPPR by
$5.5 million mainly for credit cards and higher sundry reserve
expense that had benefited from reserve release in Q2 mainly at
BPNA.
- Higher personnel cost by $5.4 million,
mainly due to higher salaries as a result of accrued salaries for
additional work hours, incentives, and medical insurance related
expenses during the quarter.
- Higher other operating taxes by $1.8
million, mainly due to higher personal property tax.
These increases were partially offset by:
- Lower business promotion expense by
$3.0 million, mainly due to lower fees from advertising agencies
due to seasonality of marketing campaigns.
Non-personnel credit-related costs, which include collections,
appraisals, credit related fees, and OREO expenses, amounted to
$25.8 million for the third quarter of 2014, compared with $10.1
million for the second quarter of 2014. The increase was
principally due to higher losses on sales of OREO’s and higher
write-downs on mortgage and commercial properties at BPPR,
discussed above.
Full-time equivalent employees (“FTEs”), including discontinued
operations, were 7,848 as of September 30, 2014, compared with
8,032 as of June 30, 2014, and 8,094 as of September 30, 2013.
For a breakdown of operating expenses by category refer to table
B.
Income taxes
Income tax expense amounted to $26.7 million for the third
quarter of 2014, compared to a benefit of $4.1 million for the
previous quarter.
On July 1, 2014, the Government of Puerto Rico approved an
amendment to the Internal Revenue Code, which, among other things,
changed the income tax rate for capital gains from 15% to 20%. As a
result, the Corporation recognized an income tax expense of
approximately $20.0 million during the third quarter of 2014,
mainly related to the deferred tax liability associated with the
portfolio acquired from Westernbank. On an adjusted basis, the
income tax provision amounted to $3.6 million, compared to $10.4
million for the previous quarter.
During the third quarter of 2014, the Corporation recorded a
favorable adjustment of approximately $6.1 million in connection
with filing its tax returns for the year 2013. Also, the
Corporation reversed approximately $3.6 million of reserves for
uncertain tax positions due to the expiration of the statute of
limitations in the Puerto Rico operations. Excluding these
adjustments, the adjusted income tax expense would have been $13.3
million, for an effective tax rate of approximately 16% on the
adjusted pre-tax income.
Credit Quality
The following table presents non-performing assets
information:
Non-Performing Assets (Unaudited) (In
thousands) 30-Sep-14 30-Jun-14 30-Sep-13 Total
non-performing loans held-in-portfolio, excluding covered loans $
621,945 $ 639,735 $ 617,573 Non-performing loans held-for-sale
19,728 4,426 2,099 Other real estate owned (“OREO”), excluding
covered OREO 135,256 139,420
135,502 Total non-performing assets,
excluding covered assets 776,929 783,581 755,174 Covered loans and
OREO 166,533 171,955
190,554 Total non-performing assets $
943,462 $ 955,536 $ 945,728 Net
charge-offs for the quarter (excluding covered loans) $
40,469 $ 46,201 $ 57,892
Ratios (excluding covered loans):
Non-covered loans held-in-portfolio (1) $
19,359,216 $ 19,635,224 $ 21,427,183 Non-performing loans
held-in-portfolio to loans held-in-portfolio (1) 3.21 % 3.26 % 2.88
% Allowance for loan losses to loans held-in-portfolio 2.69 2.68
2.46 Allowance for loan losses to non-performing loans, excluding
loans held-for-sale 83.88 82.26
85.19 [1] During the quarter ended June
30, 2014 approximately $1.8 billion in loans held-in-portfolio were
reclassified to the discontinued operations, of which $9.5 million
were in non-performing status as of June 30, 2014 and $48 thousand
were in non-performing status as of September 30, 2014.
Refer to Table H for additional information.
Provision for Loan Losses
(Unaudited) Quarters ended Nine months ended (In thousands)
30-Sep-14 30-Jun-14 30-Sep-13 30-Sep-14
30-Sep-13 Provision (reversal) for loan losses - non-covered loans:
BPPR $ 61,868 $ 74,860 $ 50,475 $ 190,643 $ 485,228 BPNA
6,298 (24,786 ) (1,760 )
(18,281 ) 1,555 Total provision for loan losses -
non-covered loans 68,166 50,074
48,715 172,362
486,783 Provision for loan losses - covered loans
12,463 11,604 17,433
49,781 60,489 Total provision for loan losses
$ 80,629 $ 61,678 $ 66,148 $
222,143 $ 547,272
Credit Quality
The Corporation’s asset quality generally continued to improve
during the third quarter of 2014, as evidenced by declines in both
non-performing loans (“NPLs”) and net charge-offs (“NCOs”). The
BPNA segment continued to reflect strong credit quality led by the
improved risk profile of its loan portfolios, further strengthened
by the divesture and reclassification to discontinued operations of
its regional operations in California, Illinois and Central Florida
as well as certain legacy and classified assets. In the BPPR
segment, stable trends continued during the quarter, but the
Corporation continues to monitor potential risks associated with
Puerto Rico’s economic and fiscal conditions.
The following presents credit quality performance for the third
quarter of 2014 for the Corporation’s non-covered portfolios.
Unless otherwise noted, all credit metrics for the third quarter of
2014 are from continuing operations.
- Inflows of NPLs held-in-portfolio,
excluding consumer loans, decreased by $23.8 million, or 15.7%,
from the previous quarter, mainly driven by improvements in the
BPPR and BPNA segments of $17.5 million and $6.3 million,
respectively.
- Non-performing loans held-in-portfolio
decreased by $17.8 million, or 2.8%, during the quarter ended
September 30, 2014, mainly driven by a $36.2 million decline in the
BPNA segment. The decline in the BPNA segment was mostly related to
loans sold or transferred to held-for-sale as part of the US
operations reorganization, which includes the sale of certain
classified and legacy loans and to commercial NPL resolutions. This
reduction was in part offset by an increase of $18.4 million in the
BPPR segment, mostly driven by higher mortgage NPLs. At September
30, 2014, NPLs represented 3.2% of total loans held-in-portfolio,
compared to 3.3% at June 30, 2014.
- Excluding the $32.3 million write-down
related to the U.S. legacy and classified bulk loan sales of
approximately $220.7 million, net charge-offs for the third quarter
of 2014 totaled $40.5 million, or an annualized 0.83% of average
non-covered loans held-in-portfolio, compared to $46.2 million, or
0.94%, in the second quarter of 2014. The decrease of $5.7 million
was primarily driven by a $4.7 million decline in the BPPR segment,
mostly due to higher commercial recoveries. Refer to Table J for
further information on net charge-offs and related ratios.
- The allowance for loan losses decreased
by $4.6 million from the second quarter of 2014, mainly driven by a
$27.7 million reduction release in BPNA, prompted primarily by the
aforementioned write-downs due to the reclassification to loans
held-for-sale of certain portfolios, and continued improvements in
the BPNA’s loan portfolio risk profile. This reduction was in part
offset by a $23.2 million allowance increase in the BPPR segment
driven by qualitative factors adjustments, which reflect
challenging macroeconomic conditions in Puerto Rico. The general
and specific reserves related to non-covered loans totaled $389.7
million and $132.0 million, respectively, at quarter-end, compared
with $405.2 million and $121.0 million, respectively, as of June
30, 2014. The ratio of the allowance for loan losses to loans
held-in-portfolio stood at 2.69% in the third quarter of 2014,
compared to 2.68% in the previous quarter.
- The provision for loan losses for the
third quarter of 2014 totaled $68.2 million, increasing by $18.1
million from the second quarter of 2014. This increase reflects a
$12.0 million impact related to the above mentioned bulk sales and
transfer of certain BPNA loans to held-for-sale, as these loans
required a $32.3 million write-down and carried $20.3 million in
reserves. Excluding the effect of the loans sales and transfers to
held-for-sale, the provision for the third quarter amounted to
$56.2 million, an increase of $6.1 million compared with the
previous quarter.
Credit Quality by Segment (Unaudited)
(In thousands) Quarters ended
BPPR 30-Sep-14 30-Jun-14 30-Sep-13
Provision for loan losses $ 61,868 $ 74,860 $ 50,475 Net
charge-offs 38,682 43,335
44,678
[1]
Total non-performing loans held-in-portfolio, excluding covered
loans 592,229 573,806 441,253 Allowance / non-covered loans
held-in-portfolio 3.09 % 2.94 %
2.55 % Quarters ended
BPNA
30-Sep-14 30-Jun-14 30-Sep-13 Provision
for loan losses (reversal of provision) - Continuing operations $
6,298 $ (24,786 ) $ (1,760 ) Provision for loan losses (reversal of
provision) - Discontinued operations - - 6,515 Net charge-offs
(recoveries) - Continuing operations 1,787 2,866 7,183 Net
charge-offs (recoveries) - Discontinued operations - - 6,031 Total
non-performing loans held-in-portfolio 29,716 65,929 176,320
Allowance / non-covered loans held-in-portfolio 0.91
% 1.59 % 2.20 %
BPPR Segment
- Inflows of NPLs held-in-portfolio,
excluding consumer loans, decreased by $17.5 million, or 12.9%,
from the second quarter of 2014, reflective of lower commercial and
mortgage inflows of $6.7 million and $9.9 million,
respectively.
- Total NPLs held-in-portfolio increased
by $18.4 million from the second quarter of 2014, mainly driven by
higher mortgage and consumer NPLs of $21.1 million and $8.5
million, respectively, partially offset by lower commercial NPLs of
$9.1 million. Consumer NPL increase was mostly due to the
reclassification from the mortgage portfolio of approximately $6.8
million in home equity loans. Sequentially, both the commercial and
consumer portfolios showed stable credit quality trends, while
mortgage NPLs continued to increase. At September 30, 2014, NPLs
represented 3.7% of total loans held-in-portfolio, compared to 3.6%
in the second quarter.
- Net charge-offs were $38.7 million,
decreasing by $4.7 million from the second quarter of 2014,
primarily reflecting a reduction of $8.3 million in the commercial
NCOs largely stemming from higher recoveries, coupled with lower
losses, offset by higher residential mortgage NCOs of $3.4 million.
The ratio of net charge-offs to average loans held-in-portfolio
decreased to 0.98% on an annualized basis from 1.09% in the
previous quarter.
- The allowance for loan losses increased
by $23.2 million from the second quarter of 2014. Consistent with
prior quarters, the increase in the allowance was mainly prompted
by qualitative factors adjustments, reflective of the challenging
macroeconomic conditions that persist in Puerto Rico. The allowance
for loan losses as a percentage of loans held-in-portfolio
increased to 3.09% from 2.94% in the second quarter of 2014.
- The provision for loan losses for the
third quarter of 2014 amounted to $61.9 million, decreasing by
$13.0 million from the previous quarter. This decrease was
predominantly driven by lower net charge-offs during the third
quarter of 2014.
BPNA Segment
- Total NPLs held-in-portfolio decreased
by $36.2 million, or 54.9%, from the second quarter of 2014. This
decrease was primarily driven by a reduction in mortgage and
consumer NPLs of $12.3 million and $4.6 million, respectively,
mainly as a result of the previously mentioned legacy and
classified bulk loan sales for an aggregate of approximately $220.7
million, and a $16.7 million reduction in commercial NPLs mostly
due to loan resolutions. Total inflows of non-performing loans
held-in-portfolio, excluding consumer loans, decreased by $6.3
million, or 40.1%, from the second quarter of 2014. At September
30, 2014, NPLs represented 0.84% of total loans held-in-portfolio,
compared to 1.7% in the second quarter.
- Excluding the $32.3 million write-down
related to US classified and legacy assets, net charge-offs
amounted to $1.8 million, essentially flat from the previous
quarter of 2014. The ratio of net charge-offs to average loans
held-in-portfolio was 19 basis points on an annualized basis,
compared to 30 basis points in the previous quarter.
- The allowance for loan losses decreased
by $27.7 million from the second quarter of 2014, primarily
reflective of a $20.3 million write-down associated with the loans
sold or transferred to loans held-for- sale, and continuous credit
quality improvements. The allowance for loan losses as a percentage
of loans held-in-portfolio decreased to 0.91% from 1.59% in the
previous quarter.
- The provision for loan losses in the
third quarter of 2014 amounted to $6.3 million, compared to a
provision release of $24.8 million in the second quarter. Excluding
the effect of the classified and legacy assets transactions, the
provision for the third quarter amounted to a provision release of
$5.7 million.
Financial Condition Highlights
(Unaudited) (In thousands) 30-Sep-14
30-Jun-14 30-Sep-13 Money market, trading and investment
securities $ 7,200,291 $ 7,949,164 $ 6,776,473 Loans not covered
under loss sharing agreements with the FDIC 19,359,216 19,635,224
21,427,183 Loans covered under loss sharing agreements with the
FDIC 2,654,263 2,736,102 3,076,009 Assets from discontinued
operations 1,129,053 1,828,382 - Total assets 34,099,095 36,587,902
36,052,116 Deposits 24,466,105 24,901,152 26,395,054 Borrowings
3,375,485 4,465,965 4,164,104 Liabilities from discontinued
operations 1,106,762 2,079,742 - Total liabilities 29,800,703
32,327,461 31,658,231 Stockholders’ equity 4,298,392
4,260,441 4,393,885
Total assets decreased by $2.5 billion from the second quarter
of 2014, driven by:
- A decrease of $699.3 million in assets
from discontinued operations as the Corporation completed the sales
of the Central Florida and Illinois regional operations. Refer to
Table P.
- A decrease of $657.5 million in other
assets due to the reduction of trade receivables of $441.6 million,
net of transaction costs, recorded during the second quarter in
connection with the issuance of the 7% Senior Notes used to
partially fund the repayment of TARP funds, and the sale of the
Corporation’s Bank Owned Life Insurance assets at BPNA, which had a
balance of approximately $230.6 million as of the end of the second
quarter.
- A decrease of $613.8 million in money
market investments as the Corporation had built up liquidity at the
end of the second quarter in anticipation of the repayment of TARP
funds and the impact of the U.S. regional sales.
- A decrease of $200.5 million in trading
account securities due to sales of mortgage backed securities at
BPPR.
- A decrease of $275.6 million in
non-covered loans held-in-portfolio, mainly at BPNA, due to the
bulk sales and reclassification of loans held for sale of
classified and legacy mortgage and commercial loans for an
aggregate of approximately $220.7 million.
- The covered loan portfolio decreased by
$81.8 million due to the continuation of loan resolutions and the
normal portfolio run-off.
- A decrease of $70.5 million in FDIC
loss share asset mainly due to collections and the amortization of
the asset, as detailed in Table O.
These decreases were partially offset by:
- An increase in loans held for sale of
$81.0 million, mainly at BPNA due to the reclassification of $105.0
million of commercial and residential mortgage loans related to
definitive agreements for bulk sales of loans to be completed
during the fourth quarter of 2014.
- An increase in investment securities
available for sale of $73.8 million due to the purchase of US
Treasuries at the BPPR segment, offset in part by sales of mortgage
backed securities and CMOs at the BPNA segment.
Total liabilities decreased by $2.5 billion from the second
quarter of 2014, driven by:
- A decrease of $973.0 million in
liabilities from discontinued operations as the corporation
completed the sales of the Central Florida and Illinois regional
operations. Refer to Table P.
- A decrease of $636.5 million in notes
payable due to the repayment of TARP Capital Purchase Program funds
to the U.S. Treasury Department of $935 million, partially offset
by an increase of $300.0 million in Advances from the Federal Home
Loan Bank of NY.
- A decrease of $424.0 million in federal
funds purchased and assets sold under agreements to repurchase
mainly due to a reduction of $250.0 million of federal funds
purchased by BPPR, and net decreases in assets sold under
agreements to repurchase of $174.0 million.
- A decrease of $435.0 million in total
deposits, mainly due to a reduction of $268.3 million in higher
cost and brokered deposits at BPNA and a reduction of $156.8
million at BPPR, mainly due to non-interest bearing deposits in
trust received near the end of the second quarter to repay
principal and interest of government bond issuances. Refer to Table
G for the composition of deposits.
Stockholders’ equity increased by $37.9 million from the second
quarter of 2014, mainly as a result of the net income for the
quarter of $62.6 million, partially offset by an increase of $19.8
million in net unrealized loss on investment securities
available-for-sale. Refer to Table G for capital ratios.
Refer to Table C for the Statements of Financial Condition.
Forward-Looking
Statements
The information included in this news release contains certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based on management’s current expectations and involve certain
risks and uncertainties that may cause actual results to differ
materially from those expressed in forward-looking statements.
Factors that might cause such a difference include, but are not
limited to (i) the rate of growth in the economy and employment
levels, as well as general business and economic conditions; (ii)
changes in interest rates, as well as the magnitude of such
changes; (iii) the fiscal and monetary policies of the federal
government and its agencies; (iv) changes in federal bank
regulatory and supervisory policies, including required levels of
capital and the impact of proposed capital standards on our capital
ratios; (v) the impact of the Dodd-Frank Wall Street Reform and
Consumer Protection Act on our businesses, business practices and
cost of operations; (vi) regulatory approvals that may be necessary
to undertake certain actions or consummate strategic transactions
such as acquisitions and dispositions; (vii) the relative strength
or weakness of the consumer and commercial credit sectors and of
the real estate markets in Puerto Rico and the other markets in
which borrowers are located; (viii) the performance of the stock
and bond markets; (ix) competition in the financial services
industry; (x) additional Federal Deposit Insurance Corporation
assessments; and (xi) possible legislative, tax or regulatory
changes. For a discussion of such factors and certain risks and
uncertainties to which the Corporation is subject, see the
Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2013, as well as its filings with the U.S. Securities
and Exchange Commission. Other than to the extent required by
applicable law, including the requirements of applicable securities
laws, the Corporation assumes no obligation to update any
forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
Founded in 1893, Popular, Inc. is the leading banking
institution by both assets and deposits in Puerto Rico and ranks
among the top 50 U.S. banks by assets. In the United States,
Popular has established a community-banking franchise providing a
broad range of financial services and products with branches in New
York, New Jersey, Florida and California.
An electronic version of this press release can be found at the
Corporation’s website: www.popular.com.
Popular will hold a conference call to discuss the financial
results today Wednesday, October 22, 2014 at 10:30 a.m. Eastern
Standard Time. The call will be broadcast live over the Internet
and can be accessed through the investor relations section of the
Corporation’s website: www.popular.com.
Listeners are recommended to go to the website at least 15
minutes prior to the call to download and install any necessary
audio software. The call may also be accessed through a dial-in
telephone number 1-866-235-1201 or 1-412-902-4127.
A replay of the webcast will be archived in Popular’s website. A
telephone replay will be available one hour after the end of the
conference call through Thursday, October 30, 2014. The replay dial
in is 1-877-344-7529 or 1-412-317-0088. The replay passcode is
10052964.
Popular, Inc. Financial Supplement to Third
Quarter 2014 Earnings Release Table A - Selected Ratios
and Other Information Table B - Consolidated Statement of
Operations Table C - Consolidated Statement of Financial
Condition Table D - Consolidated Average Balances and Yield
/ Rate Analysis - QUARTER Table E - Consolidated Average
Balances and Yield / Rate Analysis - YEAR-TO-DATE Table F -
Mortgage Banking Activities and Other Service Fees Table G -
Loans and Deposits Table H - Non-Performing Assets
Table I - Activity in Non-Performing Loans Table J -
Allowance for Credit Losses, Net Charge-offs and Related Ratios
Table K - Allowance for Loan Losses - Breakdown of General
and Specific Reserves - CONSOLIDATED Table L - Allowance for
Loan Losses - Breakdown of General and Specific Reserves - PUERTO
RICO OPERATIONS Table M - Allowance for Loan Losses -
Breakdown of General and Specific Reserves - U.S. MAINLAND
OPERATIONS Table N - Reconciliation to GAAP Financial
Measures Table O - Financial Information - Westernbank
Covered Loans Table P - Financial Information from
Discontinued Operations Table Q - Restructuring Charges
POPULAR, INC. Financial Supplement to Third
Quarter 2014 Earnings Release Table A - Selected Ratios and
Other Information (Unaudited)
Quarters ended Nine months ended 30-Sep-14
30-Jun-14 30-Sep-13 30-Sep-14 30-Sep-13 Basic
EPS from continuing operations $ 0.31 $ (3.21 ) $ 2.18 $ (2.27 ) $
3.94 Basic EPS from discontinued operations $ 0.29 $ (1.77 ) $ 0.04
$ (1.28 ) $ 0.28 Total Basic EPS $ 0.60 $ (4.98 ) $ 2.22 $ (3.55 )
$ 4.22 Diluted EPS from continuing operations $ 0.31 $ (3.21 ) $
2.18 $ (2.27 ) $ 3.93 Diluted EPS from discontinued operations $
0.29 $ (1.77 ) $ 0.04 $ (1.28 ) $ 0.28 Total Diluted EPS $ 0.60 $
(4.98 ) $ 2.22 $ (3.55 ) $ 4.21 Average common shares outstanding
102,953,328 102,781,438 102,714,262 102,845,402 102,666,570 Average
common shares outstanding - assuming dilution 103,152,916
102,781,438 103,017,443 102,845,402 103,014,674 Common shares
outstanding at end of period 103,448,206 103,472,979 103,327,146
103,448,206 103,327,146 Market value per common share $
29.44 $ 34.18 $ 26.25 $ 29.44 $ 26.25 Market capitalization
- (In millions) $ 3,046 $ 3,537 $ 2,712 $ 3,046 $ 2,712
Return on average assets 0.71 % (5.66 )% 2.51 % (1.35 )% 1.60 %
Return on average common equity 5.75 % (43.04 )% 21.64 %
(10.68 )% 14.38 % Net interest margin [2] 4.64 % 4.68 % 4.46
% 4.67 % 4.44 % Common equity per share $ 41.07 $ 40.69 $
42.04 $ 41.07 $ 42.04 Tangible common book value per common
share (non-GAAP) [1] $ 36.24 $ 35.84 $ 35.32 $ 36.24 $ 35.32
Tangible common equity to tangible assets (non-GAAP) [1] 11.16 %
10.28 % 10.32 % 11.16 % 10.32 % Tier 1 risk-based capital
[3] 16.93 % 19.23 % 18.54 % 16.93 % 18.54 % Total risk-based
capital [3] 18.20 % 20.69 % 19.82 % 18.20 % 19.82 % Tier 1
leverage [3] 11.14 % 13.07 % 12.26 % 11.14 % 12.26 % Tier 1
common equity to risk-weighted assets (non-GAAP) [1] [3]
14.79 % 13.51 % 14.20 %
14.79 % 14.20 % [1] Refer to Table N for
Non-GAAP reconciliations. [2] Not on a taxable equivalent
basis. For the quarter ended September 30, 2014, excludes the
impact of the $20.7 million fees related to repos refinancing. For
the quarter ended June 30, 2014, excludes the impact of the $414.1
million TARP discount amortization. US GAAP Net interest margin was
4.36% for the third quarter, compared to (0.77)% for the previous
quarter. Refer to Tables D & E for reconciliation. [3]
Capital ratios for the current quarter are estimated.
POPULAR, INC. Financial Supplement to Third Quarter 2014
Earnings Release Table B - Consolidated Statement of
Operations (Unaudited) Quarters ended
Variance Quarter ended Variance Nine months
ended (In thousands, except per share information) 30-Sep-14
30-Jun-14
Q3 2014vs.Q2 2014
30-Sep-13
Q3 2014vs.Q3 2013
30-Sep-14 30-Sep-13 Interest income:
Loans $ 362,592 $ 380,986 $ (18,394 ) $ 366,267 $ (3,675 ) $
1,121,180 $ 1,097,081 Money market investments 1,007 1,131 (124 )
848 159 3,111 2,632 Investment securities 33,154 33,989 (835 )
33,561 (407 ) 102,270 107,490 Trading account securities
4,446 5,344 (898 )
5,242 (796 )
15,047 16,212 Total interest income
401,199 421,450
(20,251 ) 405,918 (4,719
) 1,241,608 1,223,415
Interest expense: Deposits 26,533 26,223 310 29,115 (2,582 ) 79,614
96,176 Short-term borrowings 28,955 8,892 20,063 9,563 19,392
46,887 29,111 Long-term debt 19,290
445,716 (426,426 ) 36,228
(16,938 ) 496,896
108,061 Total interest expense 74,778
480,831 (406,053 )
74,906 (128 ) 623,397
233,348 Net interest income (expense)
326,421 (59,381 ) 385,802 331,012 (4,591 ) 618,211 990,067
Provision for loan losses - non-covered loans 68,166 50,074 18,092
48,715 19,451 172,362 486,783 Provision for loan losses - covered
loans 12,463 11,604
859 17,433
(4,970 ) 49,781 60,489
Net interest income (expense) after provision for loan losses
245,792 (121,059 )
366,851 264,864 (19,072 )
396,068 442,795 Service
charges on deposit accounts 40,585 39,237 1,348 40,517 68 119,181
123,056 Other service fees 54,839 56,468 (1,629 ) 57,041 (2,202 )
164,125 169,264 Mortgage banking activities 14,402 3,788 10,614
18,892 (4,490 ) 21,868 57,270 Net (loss) gain and valuation
adjustments on investment securities (1,763 ) - (1,763 ) - (1,763 )
(1,763 ) 5,856 Trading account profit (loss) 740 1,055 (315 )
(6,607 ) 7,347 3,772 (11,936 ) Net gain (loss) on sale of loans,
including valuation adjustments on loans held-for-sale 15,593 9,659
5,934 2,374 13,219 29,645 (56,054 ) Adjustments (expense) to
indemnity reserves on loans sold (9,480 ) (7,454 ) (2,026 ) (2,387
) (7,093 ) (27,281 ) (30,162 ) FDIC loss share (expense) income
(4,864 ) (55,261 ) 50,397 (14,866 ) 10,002 (84,331 ) (44,887 )
Other operating income 14,278
15,297 (1,019 ) 191,745
(177,467 ) 57,935
393,330 Total non-interest income 124,330
62,789 61,541
286,709 (162,379 )
283,151 605,737 Operating expenses:
Personnel costs Salaries 71,166 69,149 2,017 70,474 692 209,353
206,681 Commissions, incentives and other bonuses 14,738 12,862
1,876 14,060 678 40,699 43,537 Pension, postretirement and medical
insurance 9,282 7,532 1,750 13,744 (4,462 ) 25,515 41,968 Other
personnel costs, including payroll taxes 9,356
9,557 (201 )
10,074 (718 ) 32,376
30,106 Total personnel costs 104,542 99,100
5,442 108,352 (3,810 ) 307,943 322,292 Net occupancy expenses
21,203 20,267 936 21,386 (183 ) 62,830 62,937 Equipment expenses
12,370 12,044 326 11,387 983 35,826 34,492 Other taxes 15,369
13,543 1,826 17,680 (2,311 ) 42,575 44,433 Professional fees 67,649
67,024 625 69,237 (1,588 ) 201,672 203,989 Communications 6,455
6,425 30 6,290 165 19,565 19,236 Business promotion 13,062 16,038
(2,976 ) 14,809 (1,747 ) 40,486 42,751 FDIC deposit insurance 9,511
10,480 (969 ) 15,143 (5,632 ) 30,969 42,056 Loss on early
extinguishment of debt - - - 3,388 (3,388 ) - 3,388 Other real
estate owned (OREO) expenses 19,745 3,410 16,335 16,632 3,113
29,595 70,156 Credit and debit card processing, volume, interchange
and other expenses 5,659 5,640 19 4,816 843 16,495 14,617 Other
operating expenses 24,759 14,869 9,890 17,182 7,577 56,781 51,065
Amortization of intangibles 2,026 2,025 1 1,990 36 6,077 5,969
Restructuring costs 8,290 4,574
3,716 -
8,290 12,864 -
Total operating expenses 310,640
275,439 35,201
308,292 2,348 863,678
917,381 Income (loss) from continuing
operations before income tax 59,482 (333,709 ) 393,191 243,281
(183,799 ) (184,459 ) 131,151 Income tax expense (benefit)
26,667 (4,124 ) 30,791
17,768 8,899
45,807 (276,489 ) Income (loss)
from continuing operations 32,815 (329,585 ) 362,400 225,513
(192,698 ) (230,266 ) 407,640 Income (loss) from discontinued
operations, net of tax 29,758
(181,729 ) 211,487 3,622
26,136 (132,066 )
28,656
Net income (loss) $ 62,573
$ (511,314 ) $ 573,887 $ 229,135
$ (166,562 ) $ (362,332 ) $ 436,296
Net income (loss) applicable to common stock $ 61,643
$ (512,245 ) $ 573,888 $ 228,204
$ (166,561 ) $ (365,124 ) $ 433,504
Net income (loss) per common share - basic: Net
income (loss) from continuing operations $ 0.31 $ (3.21 ) $ 3.52 $
2.18 $ (1.87 ) $ (2.27 ) $ 3.94 Net income (loss) from discontinued
operations $ 0.29 $ (1.77 ) $ 2.06
$ 0.04 $ 0.25 $ (1.28 )
$ 0.28 Net income (loss) per common share - basic
$ 0.60 $ (4.98 ) $ 5.58 $
2.22 $ (1.62 ) $ (3.55 ) $ 4.22
Net income (loss) per common share - diluted: Net income
(loss) from continuing operations $ 0.31 $ (3.21 ) $ 3.52 $ 2.18 $
(1.87 ) $ (2.27 ) $ 3.93 Net income (loss) from discontinued
operations $ 0.29 $ (1.77 ) $ 2.06
$ 0.04 $ 0.25 $ (1.28 )
$ 0.28 Net income (loss) per common share - diluted
$ 0.60 $ (4.98 ) $ 5.58 $
2.22 $ (1.62 ) $ (3.55 ) $ 4.21
Popular, Inc. Financial Supplement to Third
Quarter 2014 Earnings Release Table C - Consolidated
Statement of Financial Condition (Unaudited)
Variance Q3 2014 vs. (In thousands)
30-Sep-14 30-Jun-14 30-Sep-13 Q2 2014 Assets:
Cash and due from banks $ 321,914 $ 362,572 $ 368,590 $ (40,658 )
Money market investments 1,053,121 1,666,944 961,788 (613,823 )
Trading account securities, at fair value 145,343 345,823 338,848
(200,480 ) Investment securities available-for-sale, at fair value
5,727,766 5,653,992 5,136,618 73,774 Investment securities
held-to-maturity, at amortized cost 112,893 114,280 140,355 (1,387
) Other investment securities, at lower of cost or realizable value
161,168 168,125 198,864 (6,957 ) Loans held-for-sale, at lower of
cost or fair value 178,008 97,010 124,532 80,998 Loans
held-in-portfolio: Loans not covered under loss sharing agreements
with the FDIC 19,450,677 19,726,234 21,520,054 (275,557 ) Loans
covered under loss sharing agreements with the FDIC 2,654,263
2,736,102 3,076,009 (81,839 ) Less: Unearned income 91,461 91,010
92,871 451 Allowance for loan losses 611,375
624,911 642,928
(13,536 ) Total loans held-in-portfolio, net
21,402,104 21,746,415
23,860,264 (344,311 ) FDIC loss share asset
681,106 751,553 1,324,711 (70,447 ) Premises and equipment, net
497,111 492,382 519,623 4,729 Other real estate not covered under
loss sharing agreements with the FDIC 135,256 139,420 135,502
(4,164 ) Other real estate covered under loss sharing agreements
with the FDIC 151,382 155,805 159,968 (4,423 ) Accrued income
receivable 116,746 119,520 122,881 (2,774 ) Mortgage servicing
assets, at fair value 152,282 151,951 161,445 331 Other assets
1,634,819 2,292,360 1,803,478 (657,541 ) Goodwill 461,246 461,246
647,757 - Other intangible assets 37,777 40,122 46,892 (2,345 )
Assets from discontinued operations 1,129,053
1,828,382 -
(699,329 ) Total assets $ 34,099,095 $
36,587,902 $ 36,052,116 $ (2,488,807 )
Liabilities and Stockholders’ Equity: Liabilities: Deposits:
Non-interest bearing $ 5,521,415 $ 5,666,685 $ 5,762,554 $ (145,270
) Interest bearing 18,944,690
19,234,467 20,632,500
(289,777 ) Total deposits 24,466,105
24,901,152 26,395,054
(435,047 ) Federal funds purchased and assets sold under
agreements to repurchase 1,650,712 2,074,676 1,793,208 (423,964 )
Other short-term borrowings 1,200 31,200 826,200 (30,000 ) Notes
payable 1,723,573 2,360,089 1,544,696 (636,516 ) Other liabilities
852,351 880,602 1,099,073 (28,251 ) Liabilities from discontinued
operations 1,106,762 2,079,742
- (972,980 ) Total
liabilities 29,800,703
32,327,461 31,658,231
(2,526,758 ) Stockholders’ equity: Preferred stock 50,160 50,160
50,160 - Common stock 1,036 1,035 1,034 1 Surplus 4,171,890
4,173,616 4,155,244 (1,726 ) Retained earnings 229,306 167,663
445,330 61,643 Treasury stock (3,933 ) (1,742 ) (877 ) (2,191 )
Accumulated other comprehensive loss (150,067 )
(130,291 ) (257,006 )
(19,776 ) Total stockholders’ equity 4,298,392
4,260,441 4,393,885
37,951 Total liabilities and stockholders’
equity $ 34,099,095 $ 36,587,902
$ 36,052,116 $ (2,488,807 )
Popular,
Inc. Financial Supplement to Third Quarter 2014 Earnings
Release Table D - Consolidated Average Balances and Yield /
Rate Analysis - QUARTER (Unaudited)
Quarter ended Quarter ended Quarter ended
Variance Variance 30-Sep-14 30-Jun-14 30-Sep-13 Q3 2014 vs. Q2 2014
Q3 2014 vs. Q3 2013 ($ amounts in millions; yields not on a taxable
equivalent basis) Average balance Income / Expense Yield / Rate
Average balance Income / Expense Yield / Rate Average balance
Income / Expense Yield / Rate Average balance Income / Expense
Yield / Rate Average balance Income / Expense Yield / Rate Assets:
Interest earning assets: Money market, trading and investment
securities $ 7,501 $ 38.6 2.06 % $ 7,839 $ 40.4
2.07 % $ 6,813 $ 39.7 2.32 % ($338 )
($1.8 ) (0.01 ) % $ 688 ($1.1 ) (0.26 ) %
Loans not covered under loss sharing agreements with the FDIC:
Commercial 8,239 99.6 4.80 8,446 102.2 4.86 8,332 102.6 4.88 (207 )
(2.6 ) (0.06 ) (93 ) (3.0 ) (0.08 ) Construction 201 2.5 4.86 175
2.4 5.55 313 3.7 4.68 26 0.1 (0.69 ) (112 ) (1.2 ) 0.18 Mortgage
6,646 84.0 5.05 6,691 85.3 5.10 6,633 81.7 4.93 (45 ) (1.3 ) (0.05
) 13 2.3 0.12 Consumer 3,905 98.4 10.00 3,894 97.9 10.08 3,776 95.7
10.06 11 0.5 (0.08 ) 129 2.7 (0.06 ) Lease financing 545
9.8 7.20 546 10.2 7.43
537 10.9 8.08 (1 ) (0.4 )
(0.23 ) 8 (1.1 ) (0.88 ) Total loans not
covered under loss sharing agreements with the FDIC 19,536 294.3
5.99 19,752 298.0 6.05 19,591 294.6 5.98 (216 ) (3.7 ) (0.06 ) (55
) (0.3 ) 0.01 Loans covered under loss sharing agreements with the
FDIC 2,727 68.3 9.95 2,811
83.0 11.83 3,119 71.6
9.13 (84 ) (14.7 ) (1.88 ) (392 ) (3.3
) 0.82 Total loans 22,263 362.6 6.48
22,563 381.0 6.77 22,710
366.2 6.41 (300 ) (18.4 ) (0.29 )
(447 ) (3.6 ) 0.07 Total interest earning
assets 29,764 $ 401.2 5.36 % 30,402 $
421.4 5.56 % 29,523 $ 405.9 5.47 %
(638 ) ($20.2 ) (0.20 ) % 241
($4.7 ) (0.11 ) % Allowance for loan losses (629 ) (627 ) (603 ) (2
) (26 ) Other non-interest earning assets 4,416 4,598 5,275 (182 )
(859 ) Assets from discontinued operations 1,473
1,863 1,979 (390 ) (506 )
Total average assets $ 35,024 $ 36,236 $ 36,174
$ (1,212 ) $ (1,150 ) Liabilities and Stockholders'
Equity: Interest bearing deposits: NOW and money market $ 4,876 $
3.9 0.32 % $ 4,897 $ 3.8 0.32 % $ 4,671 $ 3.4 0.29 % $ (21 ) $ 0.1
- % $ 205 $ 0.5 0.03 % Savings 6,740 3.7 0.22 6,713 3.6 0.22 6,615
3.5 0.21 27 0.1 - 125 0.2 0.01 Time deposits 7,569
18.9 0.99 7,709 18.8 0.98
7,701 22.2 1.14 (140 ) 0.1
0.01 (132 ) (3.3 ) (0.15 ) Total
interest bearing deposits 19,185 26.5 0.55 19,319 26.2 0.54 18,987
29.1 0.61 (134 ) 0.3 0.01 198 (2.6 ) (0.06 ) Borrowings[1]
3,591 27.6 3.06 3,614 40.5
4.49 4,403 45.8 4.15 (23
) (12.9 ) (1.43 ) (812 ) (18.2 ) (1.09 ) Total
interest bearing liabilities 22,776 54.1 0.94
22,933 66.7 1.17 23,390
74.9 1.28 (157 ) (12.6 ) (0.23 )
(614 ) (20.8 ) (0.34 ) Net interest spread 4.42 % 4.39
% 4.19 % 0.03 % 0.23 % Non-interest bearing
deposits 5,464 5,451 5,386 13 78 Other liabilities 860 915 963 (55
) (103 ) Liabilities from discontinued operations 1,618 2,113 2,200
(495 ) (582 ) Stockholders' equity 4,306 4,824
4,235 (518 ) 71 Total
average liabilities and stockholders' equity $ 35,024 $
36,236 $ 36,174 $ (1,212 ) $ (1,150 ) Adjusted
net interest income / margin non-taxable equivalent basis $ 347.1
4.64 % $ 354.7 4.68 % $ 331.0 4.46 % ($7.6 )
(0.04 ) % $ 16.1 0.18 % Impact of fees related to
repos refinancing $ 20.7 Accelerated amortization TARP discount and
related deferred costs - $ 414.1 Net interest income
(expense)/margin non-taxable equivalent basis $ 326.4 4.36 %
($59.4 ) (0.77 ) % (1) Borrowing expense for the third
quarter, including the fees related to repos refinancing, was
5.34%, while borrowing expense including the impact of the
accelerated TARP amortization in the second quarter was 50.31%.
Popular, Inc. Financial Supplement to Third
Quarter 2014 Earnings Release Table E - Consolidated Average
Balances and Yield / Rate Analysis - YEAR-TO-DATE
(Unaudited) Nine months ended Nine months
ended 30-Sep-14 30-Sep-13 Variance Average
Income / Yield / Average Income / Yield
/ Average Income / Yield / ($ amounts in millions; yields not on a
taxable equivalent basis) balance Expense Rate balance Expense Rate
balance Expense Rate Assets: Interest earning assets: Money market,
trading and investment securities $ 7,635 $ 120.4 2.10 % $
6,908 $ 126.3 2.44 % $ 727 ($5.9 ) (0.34 ) %
Loans not covered under loss sharing agreements with the FDIC:
Commercial 8,390 302.6 4.82 8,260 298.5 4.83 130 4.1 (0.01 )
Construction 187 9.7 6.93 330 10.7 4.34 (143 ) (1.0 ) 2.59 Mortgage
6,676 256.2 5.12 6,688 256.2 5.11 (12 ) - 0.01 Consumer 3,854 290.1
10.07 3,741 284.6 10.17 113 5.5 (0.10 ) Lease financing 545
30.3 7.40 541 33.1 8.16 4
(2.8 ) (0.76 ) Total loans not covered under loss
sharing agreements with the FDIC 19,652 888.9 6.04 19,560 883.1
6.03 92 5.8 0.01 Loans covered under loss sharing agreements with
the FDIC 2,823 232.3 11.00 3,299
214.0 8.67 (476 ) 18.3 2.33
Total loans 22,475 1,121.2 6.66 22,859
1,097.1 6.41 (384 ) 24.1 0.25
Total interest earning assets 30,110 $ 1,241.6
5.51 % 29,767 $ 1,223.4 5.49 % 343 $
18.2 0.02 % Allowance for loan losses (624 ) (613 )
(11 ) Other non-interest earning assets 4,566 5,186 (620 ) Assets
from discontinued operations 1,762 2,005
(243 ) Total average assets $ 35,814 $ 36,345
($531 ) Liabilities and Stockholders' Equity:
Interest bearing deposits: NOW and money market $ 4,837 $ 11.5 0.32
% $ 4,668 $ 12.0 0.34 % $ 169 ($0.5 ) (0.02 ) % Savings 6,715 10.9
0.22 6,559 11.7 0.24 156 (0.8 ) (0.02 ) Time deposits 7,605
57.2 1.01 8,013 72.5 1.21
(408 ) (15.3 ) (0.20 ) Total interest bearing deposits
19,157 79.6 0.56 19,240 96.2 0.67 (83 ) (16.6 ) (0.11 ) Borrowings
[1] 3,690 109.0 3.94 4,459
137.1 4.10 (769 ) (28.1 ) (0.16 ) Total
interest bearing liabilities 22,847 188.6 1.10
23,699 233.3 1.31 (852 ) (44.7 )
(0.21 ) Net interest spread 4.41 % 4.18 % 0.23 %
Non-interest bearing deposits 5,499 5,339 160 Other liabilities 889
1,012 (123 ) Liabilities from discontinued operations 1,957 2,214
(257 ) Stockholders' equity 4,622 4,081
541 Total average liabilities and stockholders'
equity $ 35,814 $ 36,345 ($531 )
Adjusted net interest income / margin non-taxable equivalent basis
$ 1,053.0 4.67 % $ 990.1 4.44 % $ 62.9 0.23 % Impact
of fees related to repos refinancing $ 20.7 Accelerated
amortization of TARP discount and related deferred costs 414.1 Net
interest income/margin non-taxable equivalent basis $ 618.2 2.75 %
(1) Borrowing expense including the fees related to repos
refinancing and the impact of the accelerated TARP amortization was
19.65%.
Popular, Inc. Financial Supplement
to Third Quarter 2014 Earnings Release Table F - Mortgage
Banking Activities and Other Service Fees (Unaudited)
Mortgage
Banking Activities Variance Quarters ended Q3 2014 vs. Q3 2014
vs. Nine months ended Variance (In thousands) 30-Sep-14
30-Jun-14 30-Sep-13 Q2 2014 Q3 2013
30-Sep-14 30-Sep-13 2014 vs. 2013 Mortgage
servicing fees, net of fair value adjustments: Mortgage servicing
fees $ 11,091 $ 10,558 $ 11,543 $ 533 $ (452 ) $ 32,397 $ 34,099 $
(1,702 ) Mortgage servicing rights fair value adjustments
(2,588 ) (7,740 ) 3,879
5,152 (6,467 )
(18,424 ) (6,862 ) (11,562 ) Total
mortgage servicing fees, net of fair value adjustments
8,503 2,818 15,422
5,685 (6,919 )
13,973 27,237
(13,264 ) Net gain on sale of loans, including valuation on loans
held-for-sale 7,466 8,189
3,559 (723 ) 3,907
22,831 16,968
5,863 Trading account (loss) profit:
Unrealized gains (losses) on outstanding derivative positions 13 22
(865 ) (9 ) 878 (725 ) (265 ) (460 ) Realized (losses) gains on
closed derivative positions (1,580 )
(7,241 ) 776 5,661
(2,356 ) (14,211 ) 13,330
(27,541 ) Total trading account (loss) profit
(1,567 ) (7,219 ) (89 )
5,652 (1,478 ) (14,936 )
13,065 (28,001 ) Total mortgage
banking activities $ 14,402 $ 3,788
$ 18,892 $ 10,614 $ (4,490 )
$ 21,868 $ 57,270 $ (35,402 )
Other Service Fees Variance Quarters ended Q3 2014 vs. Q3
2014 vs. Nine months ended Variance (In thousands) 30-Sep-14
30-Jun-14 30-Sep-13 Q2 2014 Q3 2013
30-Sep-14 30-Sep-13 2014 vs. 2013 Other
service fees: Debit card fees $ 10,673 $ 11,000 $ 10,667 $ (327 ) $
6 $ 32,217 $ 31,127 $ 1,090 Insurance fees 12,322 12,406 12,409 (84
) (87 ) 36,447 35,566 881 Credit card fees 17,078 16,985 16,734 93
344 50,146 48,553 1,593 Sale and administration of investment
products 6,605 7,456 8,981 (851 ) (2,376 ) 20,518 27,941 (7,423 )
Trust fees 4,711 4,566 4,148 145 563 13,740 12,760 980 Other fees
3,450 4,055 4,102
(605 ) (652 ) 11,057
13,317 (2,260 ) Total other service fees
$ 54,839 $ 56,468 $ 57,041 $ (1,629 )
$ (2,202 ) $ 164,125 $ 169,264 $ (5,139
)
Popular, Inc.
Financial Supplement to Third Quarter 2014 Earnings Release
Table G - Loans and Deposits (Unaudited)
Loans - Ending Balances Variance (In thousands)
30-Sep-14 30-Jun-14 30-Sep-13
Q3 2014 vs.Q2 2014
Q3 2014 vs.Q3 2013
Loans not covered under FDIC loss sharing agreements: Commercial $
8,058,714 $ 8,155,547 $ 9,845,477 $ (96,833 ) $ (1,786,763 )
Construction 211,850 179,059 293,220 32,791 (81,370 ) Legacy [1]
91,015 162,941 235,645 (71,926 ) (144,630 ) Lease financing 550,514
546,868 539,290 3,646 11,224 Mortgage 6,555,337 6,664,448 6,613,133
(109,111 ) (57,796 ) Consumer 3,891,786
3,926,361 3,900,418 (34,575 )
(8,632 ) Total non-covered loans held-in-portfolio $
19,359,216 $ 19,635,224 $ 21,427,183 $ (276,008 ) $ (2,067,967 )
Loans covered under FDIC loss sharing agreements
2,654,263 2,736,102 3,076,009
(81,839 ) (421,746 ) Total loans
held-in-portfolio $ 22,013,479 $ 22,371,326 $
24,503,192 $ (357,847 ) $ (2,489,713 ) Loans
held-for-sale: Commercial $ 33,658 $ 2,895 $ - $ 30,763 $ 33,658
Construction - 949 - (949 ) - Legacy [1] 31,823 - 1,680 31,823
30,143 Mortgage 106,832 93,166 122,852 13,666 (16,020 ) Consumer
5,695 - -
5,695 5,695 Total loans held-for-sale
$ 178,008 $ 97,010 $ 124,532 $ 80,998
$ 53,476 Total loans $ 22,191,487
$ 22,468,336 $ 24,627,724 $ (276,849 )
$ (2,436,237 ) [1] The legacy portfolio is comprised of commercial
loans, construction loans and lease financings related to certain
lending products exited by the Corporation as part of restructuring
efforts carried out in prior years at the BPNA segment. Note: Loans
from discontinued operations as of September 30,2014 and June 30,
2014 are presented as part of “Assets from discontinued operations”
in the Consolidated Statement of Financial Condition.
Deposits - Ending Balances Variance (In thousands)
30-Sep-14 30-Jun-14 30-Sep-13
Q3 2014 vs.Q2 2014
Q3 2014 vs.Q3 2013
Demand deposits [1] $ 6,326,220 $ 6,412,632 $ 6,410,458 $ (86,412 )
$ (84,238 ) Savings, NOW and money market deposits (non-brokered)
10,251,602 10,276,715 11,335,441 (25,113 ) (1,083,839 ) Savings,
NOW and money market deposits (brokered) 386,573 543,032 552,053
(156,459 ) (165,480 ) Time deposits (non-brokered) 5,636,443
5,790,324 6,181,676 (153,881 ) (545,233 ) Time deposits (brokered
CDs) 1,865,267 1,878,449
1,915,426 (13,182 ) (50,159 ) Total
deposits $ 24,466,105 $ 24,901,152 $
26,395,054 $ (435,047 ) $ (1,928,949 ) [1] Includes
interest and non-interest demand bearing deposits. Note: Deposits
from discontinued operations as of September 30, 2014 and June 30,
2014 are presented as part of “Liabilities from discontinued
operations” in the Consolidated Statement of Financial Condition.
Popular, Inc. Financial Supplement to Third
Quarter 2014 Earnings Release Table H - Non-Performing
Assets (Unaudited)
Variance (Dollars in thousands)
30-Sep-14
As a % ofloans HIP bycategory
30-Jun-14
As a % ofloans HIP bycategory
30-Sep-13
As a % ofloans HIP bycategory
Q3 2014 vs.Q2 2014
Q3 2014 vs.Q3 2013
Non-accrual loans: Commercial $ 252,331 3.1 % $ 278,133 3.4
% $ 316,040 3.2 % $ (25,802 ) $ (63,709 ) Construction 19,148 9.0
21,456 12.0 28,782 9.8 (2,308 ) (9,634 ) Legacy [1] 5,648 6.2 8,323
5.1 24,206 10.3 (2,675 ) (18,558 ) Lease financing 3,168 0.6 2,873
0.5 3,716 0.7 295 (548 ) Mortgage 295,125 4.5 286,320 4.3 203,208
3.1 8,805 91,917 Consumer 46,525 1.2
42,630 1.1 41,621
1.1 3,895 4,904
Total non-performing loans held-in-
portfolio, excluding covered loans [2]
621,945 3.2 % 639,735 3.3 % 617,573 2.9 % (17,790 ) 4,372
Non-performing loans held-for-sale [3] 19,728 4,426 2,099 15,302
17,629
Other real estate owned (“OREO”),
excluding covered OREO
135,256 139,420
135,502
(4,164 ) (246 )
Total non-performing assets, excluding
covered assets
776,929 783,581 755,174 (6,652 ) 21,755 Covered loans and OREO
166,533 171,955
190,554
(5,422 ) (24,021 ) Total
non-performing assets $ 943,462
$ 955,536 $ 945,728
$ (12,074 ) $ (2,266 ) Accruing loans
past due 90 days or more [4] $ 426,459
$ 420,251 $ 414,189
$ 6,208 $ 12,270
Ratios excluding covered loans:
Non-performing loans held-in-portfolio to
loans held-in-portfolio
3.21 % 3.26 % 2.88 %
Allowance for loan losses to loans
held-in-portfolio
2.69 2.68 2.46
Allowance for loan losses to
non-performing loans, excluding loans held-for-sale
83.88 82.26
85.19
Ratios including covered loans:
Non-performing assets to total assets 2.77 % 2.61 % 2.62 %
Non-performing loans held-in-portfolio to
loans held-in-portfolio
2.89 2.93 2.64
Allowance for loan losses to loans
held-in-portfolio
2.78 2.79 2.62
Allowance for loan losses to
non-performing loans, excluding loans held-for-sale
95.96 95.28
99.53
[1] The legacy portfolio is comprised
of commercial loans, construction loans and lease financings
related to certain lending products exited by the Corporation as
part of restructuring efforts carried out in prior years at the
BPNA segment. [2] Total non-performing loans
held-in-portfolio, excluding covered loans, excludes $48 thousand
and $9.5 million, respectively, in discontinued operations as of
September 30, 2014 and June 30, 2014. [3] Non-performing
loans held-for-sale as of September 30, 2014 consisted of $14.7
million in mortgage loans, $427 thousand in commercial loans and
$4.6 million in consumer loans and $10 thousand in legacy loans
(June 30, 2014 - $582 thousand in mortgage loans, $3 million in
commercial loans and $1 million in construction loans; September
30, 2013 - $1.7 million in legacy loans and $0.4 million in
mortgage loans). [4] It is the Corporation’s policy to
report delinquent residential mortgage loans insured by FHA or
guaranteed by the VA as accruing loans past due 90 days or more as
opposed to nonperforming since the principal repayment is insured.
These balances include $125 million of residential mortgage loans
insured by FHA or guaranteed by the VA that are no longer accruing
interest as of September 30, 2014 (June 30, 2014 - $124 million;
September 30, 2013 - $113 million).
Popular,
Inc. Financial Supplement to Third Quarter 2014 Earnings
Release Table I - Activity in Non-Performing Loans
(Unaudited)
Commercial loans held-in-portfolio: Quarter ended Quarter
ended 30-Sep-14 30-Jun-14 (In thousands) BPPR BPNA Popular, Inc.
BPPR BPNA Popular, Inc. Beginning balance NPLs $
253,552
$ 24,581 $
278,133
$ 245,931 $ 60,998 $ 306,929 Plus: New non-performing loans 23,410
4,541 27,951 30,068 7,726 37,794 Advances on existing
non-performing loans - - - - 951 951 Less: Non-performing loans
transferred to OREO (2,706 ) - (2,706 ) (4,103 ) - (4,103 )
Non-performing loans charged-off (10,085 ) (3,103 ) (13,188 )
(14,377 ) (5,470 ) (19,847 ) Loans returned to accrual status /
loan collections
(19,746
) (2,649 )
(22,395
) (3,967 ) (15,475 ) (19,442 ) Loans transferred to held-for-sale -
(22,967 ) (22,967 ) - (16,130 ) (16,130 )
Non-performing loans transferred from (to)
discontinued operations
- 7,503 7,503 -
(8,019 ) (8,019 ) Ending balance NPLs $
244,425 $ 7,906 $ 252,331 $ 253,552 $
24,581 $ 278,133
Construction loans
held-in-portfolio: Quarter ended Quarter ended 30-Sep-14
30-Jun-14 (In thousands) BPPR BPNA Popular, Inc. BPPR BPNA Popular,
Inc. Beginning balance NPLs $ 21,456 $ - $ 21,456 $ 22,464 $ - $
22,464 Plus: New non-performing loans - - - 952 - 952 Less:
Non-performing loans charged-off (985 ) - (985 ) (42 ) - (42 )
Loans returned to accrual status / loan collections (1,323 )
- (1,323 ) (1,918 ) -
(1,918 ) Ending balance NPLs $ 19,148 $ - $
19,148 $ 21,456 $ - $ 21,456
Mortgage loans
held-in-portfolio: Quarter ended Quarter ended 30-Sep-14
30-Jun-14 (In thousands) BPPR BPNA Popular,
Inc. BPPR BPNA Popular, Inc. Beginning balance
NPLs $
262,356
$
23,964
$
286,320
$ 229,801 $ 22,220 $ 252,021 Plus: New non-performing loans 95,207
2,802 98,009 105,113 4,677 109,790 Less: Non-performing loans
transferred to OREO (3,062 ) (870 ) (3,932 ) (2,845 ) (661 ) (3,506
) Non-performing loans charged-off (11,309 ) (395 ) (11,704 )
(8,266 ) (649 ) (8,915 ) Loans returned to accrual status / loan
collections
(53,003
)
(686
)
(53,689
) (61,447 ) (1,623 ) (63,070 ) Loans transferred to held-for-sale -
(13,123 ) (13,123 ) - - - Reclassification to consumer loans
(6,756 ) - (6,756 )
- - -
Ending balance NPLs $ 283,433 $ 11,692
$ 295,125 $ 262,356 $
23,964 $ 286,320
Legacy loans
held-in-portfolio: Quarter ended Quarter ended 30-Sep-14
30-Jun-14 (In thousands) BPPR BPNA Popular,
Inc. BPPR BPNA Popular, Inc. Beginning balance
NPLs $ - $ 8,323 $ 8,323 $ - $ 11,608 $ 11,608 Plus: New
non-performing loans - 1,852 1,852 - 2,201 2,201 Advances on
existing non-performing loans - 149 149 - 49 49 Less:
Non-performing loans transferred to OREO - (189 ) (189 ) - - -
Non-performing loans charged-off - (2,109 ) (2,109 ) - (816 ) (816
) Loans returned to accrual status / loan collections - (975 ) (975
) - (2,227 ) (2,227 ) Loans transferred to held-for-sale - (2,529 )
(2,529 ) - (1,272 ) (1,272 )
Non-performing loans transferred from (to)
discontinued operations
- 1,126
1,126 - (1,220 )
(1,220 ) Ending balance NPLs $ - $
5,648 $ 5,648 $ - $ 8,323
$ 8,323
Total non-performing loans held-in-portfolio (excluding
consumer loans): Quarter ended Quarter ended 30-Sep-14
30-Jun-14 (In thousands) BPPR BPNA Popular,
Inc. BPPR BPNA Popular, Inc. Beginning balance
NPLs $
537,364
$
56,868
$
594,232
$ 498,196 $ 94,826 $ 593,022 Plus: New non-performing loans 118,617
9,195 127,812 136,133 14,604 150,737 Advances on existing
non-performing loans - 149 149 - 1,000 1,000 Less: Non-performing
loans transferred to OREO (5,768 ) (1,059 ) (6,827 ) (6,948 ) (661
) (7,609 ) Non-performing loans charged-off (22,379 ) (5,607 )
(27,986 ) (22,685 ) (6,935 ) (29,620 ) Loans returned to accrual
status / loan collections
(74,072
)
(4,310
)
(78,382
) (67,332 ) (19,325 ) (86,657 ) Loans transferred to held-for-sale
- (38,619 ) (38,619 ) - (17,402 ) (17,402 )
Non-performing loans transferred from (to)
discontinued operations
- 8,629 8,629 - (9,239 ) (9,239 ) Reclassification to consumer
loans (6,756 ) -
(6,756 ) - -
- Ending balance NPLs $ 547,006
$ 25,246 $ 572,252 $ 537,364
$ 56,868 $ 594,232
Popular, Inc. Financial Supplement to Third Quarter 2014
Earnings Release Table J - Allowance for Credit Losses, Net
Charge-offs and Related Ratios (Unaudited)
Quarter ended Quarter ended Quarter ended
30-Sep-14 30-Jun-14 30-Sep-13
(Dollars in thousands)
Non-coveredloans
Coveredloans
Total
Non-coveredloans
Coveredloans
Total
Non-coveredloans
Coveredloans
Total Balance at beginning of period $ 526,246 $
98,665 $ 624,911 $ 542,575 $ 97,773 $ 640,348 $ 528,762 $ 106,457 $
635,219 Provision for loan losses - Continuing operations 68,166
12,463 80,629 50,074 11,604 61,678 48,715 17,433 66,148 Provision
for loan losses - Discontinued operations -
- - -
- -
6,515 - 6,515
594,412 111,128
705,540 592,649
109,377 702,026
583,992 123,890 707,882
Net loans charged-off (recovered): BPPR Commercial 1,011
16,590 17,601 9,309 5,438 14,747 16,145 2,533 18,678 Construction
(1,237 ) 4,066 2,829 (615 ) 3,700 3,085 (4,906 ) 2,893 (2,013 )
Lease financing 1,410 (1 ) 1,409 1,144 1 1,145 470 - 470 Mortgage
13,330 1,809 15,139 9,926 2,251 12,177 11,393 1,579 12,972 Consumer
24,168 (1,024 )
23,144 23,571 (678 )
22,893 21,576
57 21,633 Total BPPR
38,682 21,440 60,122
43,335 10,712
54,047 44,678
7,062 51,740 BPNA Commercial
(893 ) - (893 ) 910 - 910 (484 ) - (484 ) Construction (59 ) - (59
) - - - - - - Legacy [1] 221 - 221 (1,205 ) - (1,205 ) 2,319 -
2,319 Mortgage 26 - 26 393 - 393 1,335 - 1,335 Consumer 2,492 -
2,492 2,768 - 2,768 4,013 - 4,013 Discontinued operations
- - -
- - -
6,031 -
6,031 Total BPNA 1,787
- 1,787 2,866
- 2,866
13,214 - 13,214
Total loans charged-off (recovered) - Popular, Inc.
40,469 21,440
61,909 46,201 10,712
56,913 57,892
7,062 64,954 Net
write-downs (32,256 ) -
(32,256 ) - -
- - -
- Net write-downs related to loans
transferred to discontinued operations -
- - (20,202
) - (20,202 ) -
- - Balance at end
of period $ 521,687 $ 89,688 $
611,375 $ 526,246 $ 98,665
$ 624,911 $ 526,100 $ 116,828
$ 642,928 POPULAR, INC. Annualized net
charge-offs to average loans held-in-portfolio 0.83 % 1.12 % 0.94 %
1.01 % 1.08 % 1.06 % Provision for loan losses to net charge-offs
[2] 1.39 x 1.11 x 1.08 x 1.08 x 0.95 x 1.12 x BPPR
Annualized net charge-offs to average loans held-in-portfolio 0.98
% 1.30 % 1.09 % 1.16 % 1.15 % 1.11 % Provision for loan losses to
net charge-offs [2]
1.60
x
1.24
x 1.73 x 1.60 x 1.13 x 1.31 x BPNA Annualized net
charge-offs (recoveries) to average loans held-in-portfolio 0.19 %
0.30 % 0.91 % Provision for loan losses to net charge-offs
N.M.
N.M. 0.36 x [1]
The legacy portfolio is comprised of commercial loans, construction
loans and lease financings related to certain lending products
exited by the Corporation as part of restructuring efforts carried
out in prior years at the BPNA segment.
[2] Excluding provision for loan losses
and net write-down related to the BPNA legacy and classified asset
sales during the quarter ended September 30, 2014.
N.M. - Not meaningful.
Popular, Inc.
Financial Supplement to Third Quarter 2014 Earnings Release
Table K - Allowance for Loan Losses - Breakdown of General and
Specific Reserves - CONSOLIDATED (Unaudited)
30-Sep-14 (Dollars in thousands)
Commercial Construction
Legacy [3] Mortgage
Leasefinancing
Consumer Total [2] Specific ALLL $
64,750 $ 133 $ - $ 38,207 $ 698 $ 28,166 $ 131,954 Impaired loans
[1] $ 373,501 $ 18,894 $ 2,311 $ 431,806 $ 2,709 $ 116,830 $
946,051 Specific ALLL to impaired loans [1]
17.34 % 0.70 % - % 8.85 %
25.77 % 24.11 % 13.95 %
General ALLL $ 151,681 $ 6,375 $ 4,001 $ 83,314 $ 6,673 $ 137,689 $
389,733 Loans held-in-portfolio, excluding impaired loans [1] $
7,685,213 $ 192,956 $ 88,704 $ 6,123,531 $ 547,805 $ 3,774,956 $
18,413,165 General ALLL to loans held-in-portfolio, excluding
impaired loans [1] 1.97 % 3.30 %
4.51 % 1.36 % 1.22 %
3.65 % 2.12 % Total ALLL $ 216,431 $
6,508 $ 4,001 $ 121,521 $ 7,371 $ 165,855 $ 521,687 Total
non-covered loans held-in-portfolio [1] $ 8,058,714 $ 211,850 $
91,015 $ 6,555,337 $ 550,514 $ 3,891,786 $ 19,359,216 ALLL to loans
held-in-portfolio [1] 2.69 %
3.07 % 4.40 % 1.85 %
1.34
% 4.26 % 2.69 % [1] Excludes covered
loans acquired on the Westernbank FDIC-assisted transaction.
[2] Excludes covered loans acquired on the Westernbank
FDIC-assisted transaction. As of September 30, 2014 the general
allowance on the covered loans amounted to $89.7 million, while the
specific reserve amounted to $4 thousand. [3] The legacy
portfolio is comprised of commercial loans, construction loans and
lease financings related to certain lending products exited by the
Corporation as part of restructuring efforts carried out in prior
years at the BPNA reportable segment.
30-Jun-14 (Dollars in thousands)
Commercial Construction Legacy [3]
Mortgage
Leasefinancing
Consumer Total [2] Specific ALLL $
36,597 $ 883 $ - $ 53,815 $ 688 $ 29,043 $ 121,026 Impaired loans
[1] $ 317,746 $ 21,094 $ 2,536 $ 466,243 $ 2,653 $ 122,106 $
932,378 Specific ALLL to impaired loans [1]
11.52 % 4.19 % - % 11.54
% 25.93 % 23.79 % 12.98 %
General ALLL $ 165,912 $ 4,459 $ 9,343 $ 84,113 $ 5,271 $ 136,122 $
405,220 Loans held-in-portfolio, excluding impaired loans [1] $
7,837,801 $ 157,965 $ 160,405 $ 6,198,205 $ 544,215 $ 3,804,255 $
18,702,846 General ALLL to loans held-in-portfolio, excluding
impaired loans [1] 2.12 % 2.82 %
5.82 % 1.36 % 0.97 %
3.58 % 2.17 % Total ALLL $ 202,509 $
5,342 $ 9,343 $ 137,928 $ 5,959 $ 165,165 $ 526,246 Total
non-covered loans held-in-portfolio [1] $ 8,155,547 $ 179,059 $
162,941 $ 6,664,448 $ 546,868 $ 3,926,361 $ 19,635,224 ALLL to
loans held-in-portfolio [1] 2.48 %
2.98 % 5.73 % 2.07 %
1.09 % 4.21 % 2.68 % [1]
Excludes covered loans acquired on the Westernbank FDIC-assisted
transaction. [2] Excludes covered loans acquired on the
Westernbank FDIC-assisted transaction. As of June 30, 2014 the
general allowance on the covered loans amounted to $98.7 million,
while the specific reserve amounted to $8 thousand. [3] The
legacy portfolio is comprised of commercial loans, construction
loans and lease financings related to certain lending products
exited by the Corporation as part of restructuring efforts carried
out in prior years at the BPNA reportable segment.
Variance (Dollars in thousands)
Commercial Construction Legacy Mortgage
Lease financing Consumer Total Specific ALLL $
28,153 $ (750 ) $ - $ (15,608 ) $ 10
$ (877 ) $ 10,928 Impaired loans $ 55,755
$ (2,200 ) $ (225 ) $ (34,437 )
$ 56 $ (5,276 ) $ 13,673 General ALLL $
(14,231 ) $ 1,916 $ (5,342 ) $ (799 ) $ 1,402 $ 1,567 $ (15,487 )
Loans held-in-portfolio, excluding impaired loans $ (152,588
) $ 34,991 $ (71,701 ) $ (74,674 )
$ 3,590 $ (29,299 ) $ (289,681 ) Total ALLL $
13,922 $ 1,166 $ (5,342 ) $ (16,407 ) $ 1,412 $ 690 $ (4,559 )
Total non-covered loans held-in-portfolio $ (96,833 )
$ 32,791 $ (71,926 ) $ (109,111 ) $
3,646 $ (34,575 ) $ (276,008 )
Popular,
Inc. Financial Supplement to Third Quarter 2014 Earnings
Release Table L - Allowance for Loan Losses - Breakdown of
General and Specific Reserves - PUERTO RICO OPERATIONS
(Unaudited)
30-Sep-14 Puerto Rico (In thousands) Commercial
Construction Mortgage Lease financing Consumer
Total
Allowance for credit losses: Specific ALLL
non-covered loans $ 64,750 $ 133 $ 37,491 $ 698 $ 27,723 $ 130,795
General ALLL non-covered loans 140,906
5,534 81,728 6,673
123,816 358,657 ALLL - non-covered loans
205,656 5,667 119,219
7,371 151,539 489,452 Specific
ALLL covered loans 4 - - - - 4 General ALLL covered loans
36,411 7,193 42,524
- 3,556 89,684 ALLL -
covered loans 36,415 7,193
42,524 - 3,556
89,688 Total ALLL $ 242,071 $ 12,860 $ 161,743
$ 7,371 $ 155,095 $ 579,140
Loans
held-in-portfolio: Impaired non-covered loans $ 373,049 $
18,894 $ 424,336 $ 2,709 $ 114,850 $ 933,838 Non-covered
loans held-in-portfolio, excluding impaired loans
5,896,673 129,889 5,028,786
547,805 3,286,492 14,889,645
Non-covered loans held-in-portfolio 6,269,722
148,783 5,453,122 550,514
3,401,342 15,823,483 Impaired covered loans
2,765 2,419 - - - 5,184 Covered loans held-in-portfolio,
excluding impaired loans 1,693,886
72,049 846,472 - 36,672
2,649,079 Covered loans held-in-portfolio
1,696,651 74,468 846,472
- 36,672 2,654,263 Total loans
held-in-portfolio $ 7,966,373 $ 223,251 $
6,299,594 $ 550,514 $ 3,438,014 $ 18,477,746
30-Jun-14 Puerto Rico (In
thousands) Commercial Construction Mortgage
Lease financing Consumer Total
Allowance
for credit losses: Specific ALLL non-covered loans $ 36,597 $
883 $ 39,341 $ 688 $ 28,458 $ 105,967 General ALLL non-covered
loans 147,638 4,308
81,058 5,271
122,024 360,299 ALLL - non-covered
loans 184,235 5,191
120,399 5,959
150,482 466,266 Specific ALLL covered
loans 8 - - - - 8 General ALLL covered loans 46,685
8,996 38,941
- 4,035 98,657
ALLL - covered loans 46,693
8,996 38,941 -
4,035 98,665 Total ALLL
$ 230,928 $ 14,187 $ 159,340
$ 5,959 $ 154,517 $ 564,931
Loans held-in-portfolio: Impaired non-covered loans $
307,762 $ 21,094 $ 414,636 $ 2,653 $ 119,604 $ 865,749 Non-covered
loans held-in-portfolio, excluding impaired loans
5,991,218 114,589
5,043,936 544,215 3,296,245
14,990,203 Non-covered loans
held-in-portfolio 6,298,980
135,683 5,458,572 546,868
3,415,849 15,855,952
Impaired covered loans 2,823 2,419 - - - 5,242 Covered loans
held-in-portfolio, excluding impaired loans 1,743,144
80,344 867,075
- 40,297 2,730,860
Covered loans held-in-portfolio 1,745,967
82,763 867,075
- 40,297 2,736,102
Total loans held-in-portfolio $ 8,044,947
$ 218,446 $ 6,325,647 $ 546,868
$ 3,456,146 $ 18,592,054
Variance (In thousands) Commercial
Construction Mortgage Lease financing
Consumer Total
Allowance for credit losses: Specific
ALLL non-covered loans $ 28,153 $ (750 ) $ (1,850 ) $ 10 $ (735 ) $
24,828 General ALLL non-covered loans (6,732 )
1,226 670 1,402
1,792 (1,642 ) ALLL -
non-covered loans 21,421 476
(1,180 ) 1,412
1,057 23,186 Specific ALLL covered
loans (4 ) - - - - (4 ) General ALLL covered loans
(10,274 ) (1,803 ) 3,583
- (479 ) (8,973 ) ALLL - covered
loans (10,278 ) (1,803 )
3,583 - (479 )
(8,977 ) Total ALLL $ 11,143 $ (1,327 )
$ 2,403 $ 1,412 $ 578 $ 14,209
Loans held-in-portfolio: Impaired non-covered loans $
65,287 $ (2,200 ) $ 9,700 $ 56 $ (4,754 ) $ 68,089 Non-covered
loans held-in-portfolio, excluding impaired loans
(94,545 ) 15,300 (15,150 )
3,590 (9,753 ) (100,558 )
Non-covered loans held-in-portfolio (29,258 )
13,100 (5,450 ) 3,646
(14,507 ) (32,469 ) Impaired covered
loans (58 ) - - - - (58 ) Covered loans held-in-portfolio,
excluding impaired loans (49,258 )
(8,295 ) (20,603 ) -
(3,625 ) (81,781 ) Covered loans held-in-portfolio
(49,316 ) (8,295 )
(20,603 ) - (3,625 )
(81,839 ) Total loans held-in-portfolio $ (78,574 ) $
4,805 $ (26,053 ) $ 3,646 $ (18,132 )
$ (114,308 )
Popular, Inc. Financial
Supplement to Third Quarter 2014 Earnings Release Table M -
Allowance for Loan Losses - Breakdown of General and Specific
Reserves - U.S. MAINLAND OPERATIONS (Unaudited)
30-Sep-14 U.S. Mainland (In
thousands) Commercial Construction Legacy
Mortgage Consumer Total
Allowance for
credit losses: Specific ALLL $ - $ - $ - $ 716 $ 443 $ 1,159
General ALLL 10,775 841
4,001 1,586 13,873
31,076 Total ALLL $ 10,775
$ 841 $ 4,001 $ 2,302
$ 14,316 $ 32,235
Loans
held-in-portfolio: Impaired loans $ 452 $ - $ 2,311 $ 7,470 $
1,980 $ 12,213 Loans held-in-portfolio, excluding impaired loans
1,788,540 63,067
88,704 1,094,745 488,464
3,523,520 Total loans held-in-portfolio
$ 1,788,992 $ 63,067 $ 91,015
$ 1,102,215 $ 490,444 $
3,535,733 30-Jun-14 U.S. Mainland (In
thousands) Commercial Construction Legacy
Mortgage Consumer Total
Allowance for
credit losses: Specific ALLL $ - $ - $ - $ 14,474 $ 585 $
15,059 General ALLL 18,274 151
9,343 3,055
14,098 44,921 Total ALLL $
18,274 $ 151 $ 9,343 $ 17,529
$ 14,683 $ 59,980
Loans
held-in-portfolio: Impaired loans $ 9,984 $ - $ 2,536 $ 51,607
$ 2,502 $ 66,629 Loans held-in-portfolio, excluding impaired loans
1,846,583 43,376
160,405 1,154,269 508,010
3,712,643 Total loans held-in-portfolio
$ 1,856,567 $ 43,376 $ 162,941
$ 1,205,876 $ 510,512 $
3,779,272
Variance (In
thousands) Commercial Construction Legacy
Mortgage Consumer Total
Allowance for
credit losses: Specific ALLL $ - $ - $ - $ (13,758 ) $ (142 ) $
(13,900 ) General ALLL (7,499 ) 690
(5,342 ) (1,469 ) (225 )
(13,845 ) Total ALLL $ (7,499 ) $ 690
$ (5,342 ) $ (15,227 ) $ (367 ) $
(27,745 )
Loans held-in-portfolio: Impaired loans $ (9,532 )
$ - $ (225 ) $ (44,137 ) $ (522 ) $ (54,416 ) Loans
held-in-portfolio, excluding impaired loans (58,043 )
19,691 (71,701 ) (59,524
) (19,546 ) (189,123 ) Total loans
held-in-portfolio $ (67,575 ) $ 19,691 $
(71,926 ) $ (103,661 ) $ (20,068 ) $ (243,539
)
Popular, Inc. Financial Supplement to
Third Quarter 2014 Earnings Release Table N - Reconciliation
to GAAP Financial Measures (Unaudited)
(In thousands, except share or per share information)
30-Sep-14 30-Jun-14 30-Sep-13 Total
stockholders’ equity $ 4,298,392 $ 4,260,441 $ 4,393,885 Less:
Preferred stock (50,160 ) (50,160 ) (50,160 ) Less: Goodwill
(461,246 ) (461,246 ) (647,757 ) Less: Other intangibles
(37,777 ) (40,122 ) (46,892 )
Total tangible common equity $ 3,749,209 $ 3,708,913
$ 3,649,076 Total assets $ 34,099,095 $
36,587,902 $ 36,052,116 Less: Goodwill (461,246 ) (461,246 )
(647,757 ) Less: Other intangibles (37,777 )
(40,122 ) (46,892 ) Total tangible assets $
33,600,072 $ 36,086,534 $ 35,357,467
Tangible common equity to tangible assets 11.16 %
10.28 % 10.32 % Common shares outstanding at end of period
103,448,206 103,472,979 103,327,146 Tangible book value per common
share $ 36.24 $ 35.84 $ 35.32
(In thousands) 30-Sep-14
30-Jun-14 30-Sep-13 Common stockholders’ equity $
4,248,232 $ 4,210,281 $ 4,343,725 Less: Unrealized losses (gains)
on available-for-sale securities, net of tax[1] 16,787 (4,071 )
5,514 Less: Disallowed deferred tax assets[2] (618,141 ) (636,081 )
(643,716 ) Less: Disallowed goodwill and other intangible assets,
net of deferred tax liability (444,759 ) (447,182 ) (646,464 )
Less: Aggregate adjusted carrying value of all non-financial equity
investments (1,462 ) (1,381 ) (1,398 ) Add: Adjustment of pension
and postretirement benefit plans and unrealized gains (losses) on
cash flow hedges, net of tax[3] 102,279
103,263 216,274 Total Tier 1
common equity $ 3,302,936 $ 3,224,829 $
3,273,935 Tier 1 common equity to risk-weighted
assets 14.79 % 13.51 % 14.20
% [1] In accordance with regulatory risk-based capital
guidelines, Tier 1 capital excludes net unrealized gains (losses)
on available-for-sale debt securities and net unrealized gains on
available-for-sale equity securities with readily determinable fair
values. In arriving at Tier 1 capital, institutions are required to
deduct net unrealized losses on available-for-sale equity
securities with readily determinable fair values, net of tax.
[2] Approximately $147 million of the
Corporation’s $758 million of net deferred tax assets included as
“Other assets” in the consolidated statement of financial condition
at September 30, 2014 (June 30, 2014 - $159 million and $789
million, respectively; September 30, 2013 - $160 million and $844
million, respectively), were included without limitation in
regulatory capital pursuant to the risk-based capital guidelines,
while approximately $618 million of such assets at September 30,
2014 (June 30, 2014 - $636 million; September 30, 2013 - $644
million) exceeded the limitation imposed by these guidelines and,
as “disallowed deferred tax assets”, were deducted in arriving at
Tier 1 capital. The remaining $(7) million of the Corporation’s
other net deferred tax assets at September 30, 2014 (June 30, 2014
- $(6) million; September 30, 2013 - $40 million) represented
primarily the following items: (a) the deferred tax effects of
unrealized gains and losses on available-for-sale debt securities,
which are permitted to be excluded prior to deriving the amount of
net deferred tax assets subject to limitation under the guidelines;
(b) the deferred tax asset corresponding to the pension liability
adjustment recorded as part of accumulated other comprehensive
income; and (c) the deferred tax liabilities associated with
goodwill and other intangibles.
[3] The Federal Reserve Bank has granted interim capital
relief for the impact of pension liability adjustment.
Popular, Inc. Financial Supplement to Third
Quarter 2014 Earnings Release Table O - Financial
Information - Westernbank Covered Loans (Unaudited)
Revenues Quarters ended
(In thousands) 30-Sep-14 30-Jun-14 Variance Interest
income on covered loans $ 68,251 $ 82,975
$ (14,724 ) FDIC loss share expense: Amortization of
indemnification asset (42,524 ) (72,095 ) 29,571 Reversal of
accelerated amortization in prior periods 15,046 - 15,046 80%
mirror accounting on credit impairment losses [1] 9,863 10,372 (509
) 80% mirror accounting on reimbursable expenses 15,545 11,085
4,460
80% mirror accounting on recoveries on
covered assets, including rental income on OREOs, subject to
reimbursement to the FDIC
(2,633 ) (3,557 ) 924 Change in true-up payment obligation 1,078
(1,206 ) 2,284 Other (1,239 ) 140
(1,379 ) Total FDIC loss share expense
(4,864 ) (55,261 ) 50,397
Total revenues 63,387 27,714
35,673 Provision for loan losses
12,463 11,604 859
Total revenues less provision for loan losses $
50,924 $ 16,110 $ 34,814
[1]Reductions in expected cash flows for ASC 310-30 loans, which
may impact the provision for loan losses, may consider reductions
in both principal and interest cash flow expectations. The amount
covered under the FDIC loss sharing agreements for interest not
collected from borrowers is limited under the agreements
(approximately 90 days); accordingly, these amounts are not subject
fully to the 80% mirror accounting.
Non-personnel
operating expenses Quarters ended (In thousands)
30-Sep-14 30-Jun-14 Variance Professional fees $
5,164 $ 4,726 $ 438 OREO expenses 11,661 5,249 6,412 Other
operating expenses 3,160 2,868
292 Total operating expenses $ 19,985
$ 12,843 $ 7,142 Expense reimbursements from
the FDIC may be recorded with a time lag, since these are claimed
upon the event of loss or charge-off of the loans which may occur
in a subsequent period.
Quarterly average
assets Quarters ended (In millions) 30-Sep-14
30-Jun-14 Variance Covered loans $ 2,727 $ 2,811 $ (84 )
FDIC loss share asset 687 792
(105 )
Activity in the carrying amount and
accretable yield of covered loans accounted for under ASC
310-30 Quarters ended
30-Sep-14 30-Jun-14 (In thousands) Accretable yield
Carrying amount of loans Accretable yield
Carrying amount of loans Beginning balance $ 1,280,758 $
2,610,664 $ 1,218,212 $ 2,733,122 Accretion (66,017 ) 66,017
(79,863 ) 79,863 Changes in expected cash flows 97,780 - 142,409 -
Collections / charge-offs -
(148,248 ) - (202,321 ) Ending
balance 1,312,521 2,528,433 1,280,758 2,610,664 Allowance for loan
losses - ASC 310-30 covered loans -
(85,640 ) - (90,892 )
Ending balance, net of allowance for loan losses $ 1,312,521
$ 2,442,793 $ 1,280,758 $
2,519,772
Activity in the carrying amount
of the FDIC indemnity asset Quarters ended (In
thousands) 30-Sep-14
30-Jun-14 Balance at beginning of period $ 751,553 $ 833,721
Amortization (42,524 ) (72,095 ) Reversal of accelerated
amortization in prior periods 15,046 - Credit impairment losses to
be covered under loss sharing agreements 9,863 10,372 Reimbursable
expenses to be covered under loss sharing agreements 15,545 11,085
Net payments to (from) FDIC under loss sharing agreements (73,106 )
(31,530 ) Other adjustments attributable to FDIC loss sharing
agreements 4,729
- Balance at end of period
$ 681,106 $ 751,553
Activity in the remaining FDIC loss share asset
amortization Quarters ended (In thousands)
30-Sep-14 30-Jun-14 Balance at
beginning of period $ 105,939 $ 71,634 Amortization (42,524 )
(72,095 ) Impact of lower projected losses
3,147 106,400
Balance at end of period $ 66,562
$ 105,939
POPULAR, INC.
Financial Supplement to Third Quarter 2014 Earnings Release
Table P - Financial Information from Discontinued Operations
(Unaudited) Assets and
Liabilities from Discontinued Operations (In thousands)
30-Sep-14 30-Jun-14 Variance Cash $ 9,500 $
18,923 $ (9,423 ) Loans held-for-sale 1,099,673 1,783,998 (684,325
) Premises and equipment, net 8,596 17,553 (8,957 ) Other assets
11,284
7,908 3,376 Total assets
$ 1,129,053
$ 1,828,382 $ (699,329 ) Deposits $ 1,089,046
$ 2,058,309 $ (969,263 ) Short-term borrowings - 2,998 (2,998 )
Other liabilities
17,716 18,435 (719 )
Total liabilities
$ 1,106,762 $ 2,079,742 $ (972,980 ) Net
assets (liabilities)
$ 22,291 $ (251,360 ) $ 273,651
Components of Net Income (Loss) from Discontinued
Operations Quarters ended
Nine months ended (In thousands) 30-Sep-14
30-Jun-14 30-Sep-13
30-Sep-14 30-Sep-13 Net interest income $
16,022 $ 19,092 $ 23,195 $ 56,911 $ 66,172 Provision (reversal) for
loan losses - - 6,515 (6,764 ) (1,345 ) Gain on sale of regions
25,775 - - 25,775 - Other non-interest income 6,567 9,388 5,250
26,488 13,642 Personnel costs 11,941 12,117 8,487 32,910 25,215 Net
occupancy expenses (1,305 ) 2,845 3,325 5,871 9,355 Professional
fees 4,916 5,903 2,802 13,612 8,511 Goodwill impairment charge -
186,511 - 186,511 - Other operating expenses 3,054
2,833 3,694
9,100 9,422 Net income (loss) from
discontinued operations $ 29,758 $ (181,729 )
$ 3,622 $ (132,066 ) $ 28,656
POPULAR, INC. Financial Supplement to Third Quarter 2014
Earnings Release Table Q - Restructuring Charges
(Unaudited) Restructuring Charges Quarters
ended (In thousands) 30-Sep-14 30-Jun-14
Variance Personnel costs $ 6,194 $ 3,630 $
2,564 Net occupancy expenses 152 271 (119 ) Equipment expenses 141
190 (49 ) Professional fees 1,431 448 983 Communications 14 - 14
Other operating expenses 358 35
323 Total restructuring costs $ 8,290 $ 4,574
$ 3,716
Popular, Inc.Investor Relations:Brett Scheiner,
212-417-6721Investor Relations OfficerorMedia
Relations:Teruca Rullán, 787-281-5170Mobile: 917-679-3596Senior
Vice President, Corporate Communications
Popular (NASDAQ:BPOP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Popular (NASDAQ:BPOP)
Historical Stock Chart
From Apr 2023 to Apr 2024